What US firms need to cut it in the Square Mile

Everyone has agreed for years that large US law firms should have taken the City by storm. They have the profitability and scale to outmuscle all but a handful of UK practices, strong banking connections and are driven by an impenetrable and huge domestic market. What could possibly go wrong? Quite a lot, as it turned out.

US firms have been too unwilling to invest or trust their local lawyers and often greatly overestimated the global power of their brands. Arguably, an even bigger problem has been their sheer naivety about the City legal market, which has led to a series of breathtakingly daft senior recruitment decisions.

In truth, since 2002-04, which was an almost universally tough period for major City law firms, US rivals have struggled to stay in the game. With a few notable exceptions, American firms have been largely either too conservative to marshal a major assault on the City or not profitable enough to keep up with resurgent UK rivals.

Which brings us to 2010, a year that in many ways looks the most promising for US firms in London for nearly a decade. They have the benefit of UK growth eked out painfully over the years, strong relative profitability thanks to less cyclical practices and the dollar's revival in their favour. And they are facing City rivals that are generally unsettled.

The key question asked in our annual international firms in London feature is: will they seize their moment? In most cases, I suspect not. Cracking London takes a lot more than money. It requires a very particular and delicate mixture of characteristics that US firms have displayed only sporadically.

First up, you need the guts to make substantial investments – not something that comes naturally to the breed. At least as important is the patience required to break any competitive market and a long-term plan that accepts there will be some reverses along the way. Many firms have managed a year or two of dramatic expansion only to fall back – but no-one ever cracked London in that kind of timeframe.

The final quality is maturity, both of the practice and in local knowledge. For US firms that means understanding that developing and retaining talent from associate to partner is crucial to long-term success. Too often US firms have focused on senior partner recruitment, as if you can simply assemble a business like a jigsaw rather than seeking to build something organically.

But City firms would be wrong to be too complacent. By trial, error and stubborn pride, considerable progress has been made over the last decade and lessons have been learned by the most committed. For a very select few, those grandiose international ambitions are starting to sound rather less fanciful and altogether more credible.