Is the Biglaw Boom About to Bust?
On both sides of the pond, industry observers are asking the question, "Is boom time for large firms about to end?" Or, as Bruce MacEwen asks it at Adam Smith, Esq., "Has the gravy train departed?" MacEwen is prompted to ask the question after reading parallel stories from London's Financial Times, Law Firms Hit by Market Turmoil, and Philadelphia's The Legal Intelligencer, With Dip in Economy, are Associate Layoffs on the Horizon?, both suggesting that dips in the economy, domestically and internationally, may foreshadow corresponding drops in large-firm profitability and hiring.
For firms in the United States, particularly those with significant practices in securities and finance, MacEwen's forecast is partly cloudy with a possibility of rain -- but no real deluge. That is thanks both to diversification of firms' practices and their no-holds-barred battle for talented corporate associates. Management consultant Peter Zeughauser tells MacEwen, "I can't even imagine a firm laying off an M&A lawyer. It's beyond comprehension."
MacEwen likewise sees no reason for U.K. firms to panic. The Financial Times piece opens with this gloomy assertion:
"Leading London-based international law firms are starting to feel a chill from the world market turmoil that may threaten the industry's unprecedented profits boom."
But MacEwen cites Mark Campbell, global head of finance at Clifford Chance, as saying this is more a matter of the froth having disappeared. Firms that have sufficiently diversified will do fine, MacEwen suggests, and the more nimble among them will do even finer.
And let's put all this boom-or-bust talk in perspective. The Financial Times piece and a similar report in The Times of London (Law Firms Riding All-time High - But is the Boom About to End?) are premised upon the latest Global 50 survey published by the U.K. periodical Legal Business. The Times sums up that survey with this lead:
"The UK legal market is more profitable than at any time in history with the leading firms billing over 350 per cent more than they did 15 years ago."
Legal Business describes the survey through a reference to last year's survey, when it said, "There has never been a better time to be a global law firm -- especially if you bill in sterling." That comeback remains in full swing this year, the magazine reports, adding that "some of the best-known US firms have been left looking like they have some catching up to do." While the magazine predicts that the market may have reached its peak, one lawyer tells The Times that billions of pounds worth of deals remain in the pipeline. Observes another: "All markets move in cycles. We will survive this one."
Survive -- and, no doubt, prosper.
Posted by Robert J. Ambrogi on August 29, 2007 at 04:50 PM | Permalink
| Comments (1)