Global 100: top firms push revenues to new high amid merger rush
Consolidation in the legal market has helped the world's 100 largest law firms to cast aside the ongoing economic downturn to see combined revenues soar to a record high of $81.9bn (£50.7bn) over the last year.
October 18, 2012 at 07:03 PM
3 minute read
Combined turnover hits new record as gap between the top and bottom of the table keeps growing
Consolidation in the legal market has helped the world's 100 largest law firms to cast aside the ongoing economic downturn to see combined revenues soar to a record high of $81.9bn (£50.7bn) over the last year.
The 2012 Global 100 – a joint initiative from The American Lawyer and Legal Week based on the financial results for the 2011 calendar year for US firms and the 2011-12 financial year for UK and international firms – found total revenues grew by 6.8%.
Much of this growth – which comes after combined turnover rose by 3% during the previous year – was driven by merger activity, the majority of which was agreed under looser Swiss-verein-style deals, which allow for costs to be shared without shared profits.
Stripping away the results of recent verein mergers which skew the figures (SNR Denton, Squire Sanders and Norton Rose) and CMS Legal – which saw combined revenues from all 10 member firms in its European Economic Interest Grouping included for the first time – revenues across the group grew by a more modest 4.6%.
Seven firms in the Global 100 – including the world's two largest law firms, Baker & McKenzie and DLA Piper – are structured under verein-style deals, demonstrating growing acceptance of the model in the years since the 2010 mergers of Hogan & Hartson and Lovells and Norton Rose with Australia's Deacons.
This number of vereins will increase to at least eight by 2013, when results from newly formed Sino-Australian firm King & Wood Mallesons are included. Meanwhile, fully integrated results from Herbert Smith Freehills will also significantly impact on next year's rankings as demand for overseas growth and increased investment power continues to drive global tie-ups.
Based on the most recent year's financial results, Herbert Smith Freehills will enter the global rankings at around number 13, just ahead of the Norton Rose Group.
CC managing partner David Childs (pictured) commented: "The challenging markets of the past few years have accelerated the trend towards internationalisation across a wide cross-section of industries. It is therefore no surprise that many firms are looking at how they shape their businesses."
As mergers and global expansion continue apace, the research found the gap between the top of the 100 and the bottom continues to widen, increasing the pressure on those focusing on domestic strategies. With combined revenues of $38bn (£23.5bn), the top 25 global law firms brought in nearly half the total revenues of the top 100, and almost exactly twice the fee income of firms in the 26-50 bracket.
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