They sometimes say that today's newspaper is tomorrow's chip paper. Given the content of this week's special issue, we think we are dealing with paper of the gilt-edged variety. The UK top 50 has had a cracking year off the back of the booming M&A and capital markets. And sitting pretty at the top of the pile is (most of) the magic circle, which has enjoyed its strongest year since the dotcom boom.

Particularly impressive has been Linklaters. For two years running the firm has recorded strong growth against an even steeper rises in profits. This has seen the firm surge past Freshfields Bruckhaus Deringer on profits and turnover to the point where it is in touching distance of becoming the UK's largest firm and is closing in on Slaughter and May-level profits. This performance directly influenced Freshfields' landmark decision to ditch its long-cherished all-equity partnership structure.

Current market conditions should also have favoured the chasing pack, but the group's performance remains patchy, despite Simmons & Simmons' rebound off the back of some meaty European mandates. The favourable European M&A market has also re-opened the debate over the need for an international network after several years that favoured the London-centric.

It is no coincidence that the conservative/indecisive Herbert Smith has just kicked off a major strategy review. But London remains the ultimate prize, as Lovells has come to realise, notwithstanding a strong performance from parts of its international network. Throw in the strongest of the national firms and the leading US City practices and what you get is an intense battle for the City's upper mid-market.

Is the magic circle above the fray? Here subtle forces are at play. Strip out Slaughters, which is less than half the size of Allen & Overy (A&O), and you get a 'Big Four' grouping of international giants. But within the crucial arena of European M&A, three of these firms – Freshfields, Linklaters and Clifford Chance (CC) – are pulling significantly away from the fourth, and smallest member, A&O. CC has muscled into cross-border M&A off the back of its European network and has much integration pain behind it. Imagine a quality but domestically driven 'league' headed by Slaughters and A&O and stretching through Lovells, Ashurst all the way to Travers Smith. Current trends suggest this may not be as fanciful an idea as it at first seems. It is no longer a question of who you add to the magic circle, the question may be who you take out.