Who says M&A must dominate City law?

Corporate rules, right? For 20 years, it's been received wisdom that corporate takeover work is so profitable and strategically important to law firms that the M&A practice has effectively set the course for major law firms. Because, like most organisations, law firms' apparently flat structure belies the fact that there is a small group of influential individuals that have an effective veto over strategic direction. 

The common image many have of top City firms as corporatised, centrally-run machines is an illusion – such firms maintain an uneasy, bipolar accord between senior management and a group of key transactional partners, even allowing for the fact that deal lawyers are heavily represented in law firms' C-suites.

Once this was entirely logical. The notion of law firms stripping down to their core areas of strength gave the magic circle momentum, clarity and profitability. And in times of booming markets, the numbers spoke for themselves.

But now? For years – certainly since the credit crunch – there have been growing indications that the special status accorded for corporate partners could be getting out of date. For – as Mergermarket's latest research reminds us – corporate hasn't been quite the engine of profitability for a long time now. There has been a slow but perceptible shift in revenues towards contentious practice, be it litigation, arbitration or regulation.

Yet there is little sign that this greater commercial power has been recognised in terms of institutional clout – a factor that has caused no end of angst at Herbert Smith. What else to explain the rash of boutiques that have been set up by litigators chaffing at the confines of M&A-run institutions?

In addition, as law firms consolidate and forge genuinely global brands, the influence of a handful of big billers can become increasingly problematic. Allen & Overy is interesting in this regard – it is arguably the one elite firm that has not always, but pretty often, called the bluff of its own transactional heavyweights when it has come down to it.

And here's potentially a more fundamental reason to question the status quo: one law firm leader recently told me of his conviction that his firm's push towards industry focus is paying huge dividends. The result, he argued, was far more dynamic teams that are increasingly thinking in terms of their clients and entrepreneurially building their own business. 

This suggests that if sector focus is the future for global law, then the obvious but painfully radical next step is to either abolish the corporate practice in favour of fully-fledged sector teams or at least drastically reconstitute M&A as a smaller central function designed to develop young lawyers and support dominant sector practices. I'm not holding my breath, but how much longer can the domination of corporate partners continue?