Emerging markets provide source of comfort as law firm leaders lament patchy deal flow

Charles Martin, senior partner, Macfarlanes

On the market:
"This is a rapidly changing market and you cannot afford to stick to one formula. You have to be responsive. Having great people in the right place is, of course, key.

"We are increasingly competing with US firms in the London market on a day-to-day basis – like us, they tend to have a low leverage model, a strong client service ethic and are not institutional in approach."

Will Lawes, senior partner, Freshfields Bruckhaus Deringer

On the firm's expansion:
"We have worked hard over recent years to make sure we are well-placed to help clients outside the more challenging European markets. For example, we have made additional investments in our business in the US, Singapore and China. We have also re-doubled our efforts to build strong and productive relationships with firms in countries where we do not have an office to ensure we can support our clients wherever they need us. Indeed, our mandates in markets where we don't have an office have been a crucial part of our recent success – from Latin America through to Africa, the Mediterranean ring and others."

Tim Eyles, UK managing partner, Taylor Wessing

On the market:
"Overall, we face challenging market conditions and continuing pressure on fees. There is an electric pace of change in the market, so we have to constantly adapt our strategy to stay ahead of the competition. Clients increasingly look for their lawyers to be well-rounded business advisers so knowledge of clients' industries is a priority."

On the firm's performance:
"We are well established in sectors that are generating decent growth – for example in TMT and private wealth – so we feel the outlook is positive. With nine new offices in the CEE and Singapore, the last 12 months have been a period of growth and consolidation for us in regions that we believe look to tomorrow."

On the firm's expansion:
"Asia remains an area of focus for us, given it's where a lot of wealth is being generated, and we are continuing to develop relationships in a number of jurisdictions there. Similarly the Middle East is an area of future growth where we continue to monitor developments and opportunities for expansion."

Neville Eisenberg, managing partner, Berwin Leighton Paisner

On the firm's performance:
"Until the last year, we had had an extraordinarily good recession. If you average out the past three or four years, it looks OK. Nonetheless, we were surprised that things slowed down to the degree that they did, particularly on the transactional side."

On pricing and lateral hiring:
"In the past five years, we've invested a lot in people from the very best firms. They have been getting up to speed and now we are competing for higher-quality work than we used to. That is part of the reason why we found last year challenging.

"There is considerable pricing competition from all levels of the market. You can't make a dramatic shift in market position without having some bumps and it takes time. It has paid off in ways we never thought it would, but you always have some lateral hires that take a bit longer to settle in."

Wim Dejonghe, managing partner, Allen & Overy

On the firm's performance:
"We are quietly confident as we see a continuing upturn in activity – the past five or so months of the calendar year have been looking much better than the same time a year ago. Capital markets, banking and litigation remain strong areas for us and while corporate remains challenging, it has grown stronger than it was a year ago. In addition, we continue to perform well in the league tables.

"Geographically, Europe is still wobbling, but London is doing better. And while the US still has some uncertainty, it is moving in the right direction. The stronger performers are still in the Middle East and Asia. Hong Kong and China remain extremely competitive, but Southeast Asia has been consistently strong for us in emerging markets such as Indonesia, Singapore, Thailand and Vietnam."

On the market:
"There remains an imbalance between supply and demand, which means the competition in the legal market hasn't decreased, so pressures on quality, pricing, how you staff deals and service levels remain high."

David Stewart, CEO, Olswang

On the firm's performance:
"Last year our European network, with the significant exceptions of Belgium and Germany, found H1 challenging. We anticipated the impact of the Olympics and the Jubilee on transactional activity in the UK but perhaps not the full extent of client concerns in the Eurozone. However, we fared much better than expected in the second half of the year, leading to a year on year revenue increase of around 3%.

"At the end of Q1 this year signs are good. The market is patchy, and not everyone is expecting good trading conditions, but we are cautiously confident it will be more consistent than last year, and that the European economy will slowly grow healthier over the next three to four years, with Asia growing much more rapidly."

On consolidation in the market:
"Outside the top 40 there is a much more changeable picture for UK law firms. More regional and smaller commercial firms are seen to be struggling, and banks may become increasingly reluctant to lend to them. This, on top of a general downturn in the personal injury market, is likely to lead to more consolidation in the market."

Peter Hasson, chief executive, Clyde & Co

On performance:
"Key to last year was maintaining growth in what was a particularly tough trading environment, especially during the first two quarters which saw the Olympics slow growth across the UK."

On the firm's merger with Barlow Lyde & Gilbert:
"In the UK, the main focus was on consolidation of the merger with Barlows and we are now operating on what I would call a normal footing. Internationally, we were unaffected by the merger and continued to grow with revenues up 12% and overseas work contributing 40% of all turnover."

Sir Nigel Knowles, global co-CEO, DLA Piper

On adapting to shifts in client demand:
"In the past year, law firms have increasingly found themselves dealing with a more sophisticated buyer of legal services. There has been a shift in buying patterns and a desire from clients to be more discerning on who they work with.

"Law firms are expected to provide a service that is streamlined and relevant, while being able to demonstrate knowledge of the sector in order to help the client realise their commercial objectives – we have to be their trusted adviser. This has thrown up plenty of opportunities for us to win potential new clients or do more work for existing clients."

Michael Chissick, managing partner, Field Fisher Waterhouse

On the market:
"The macro economy is still difficult. We've seen 3-4 years of sluggish growth but we're seeing activity levels pick up again. Our corporate team, for instance, got off to a great start in Q1 this year."

On adapting to shifts in client demand:
"There is an oversupply of legal services, and more work is going in-house, but there are still opportunities for firms, which have to be more creative and innovative than ever before. Clients are demanding increasing sophistication on how to procure and bundle services, and want to see tailored know-how and training."

On adapting to shifts in client demand:
"Technology has a huge part to play in differentiating firms from the competition. Firms need to adapt to a rapidly changing marketplace by doing things in real time and adopting more sophisticated systems for the likes of online bidding and alternative charging methods, instead of staying wedded to the traditional ways."

Peter Martyr, global CEO, Norton Rose Fulbright

On the international outlook:
"The US remains by far the biggest market in the world and London is still very strong, which in turn plays into activity in emerging markets. Asia is also strong, but it is easy for many to get distracted by the statistics – after all, 100% of Asia business might come to a lot less than Europe work even if it shrank by 5%.

"We are seeing the classic market situation where firms are pouring into fashionable regions such as Singapore, but may find themselves struggling as a result of rushing into an overlawyered market."

On the firm's merger with Fulbright & Jaworski:
"We are in a period of integration and that will take years, not months, to feel the full effect. However, things are going well and we are pleased with the results. Mergers will continue in the market, some driven by strategic positioning, others by necessity."

James Collis, managing partner, Ashurst

On the international outlook:
"The US banking market is very active and prospects for the economy are positive, while our focus on structured finance has resulted in good activity levels. In Asia, we have had a significant increase in revenue over the past year as a result of some great deals in, for example, Hong Kong."

On the Blake Dawson merger:
"We are a significant business now. We have a strong strategic focus and obviously Australia is one element of that. But we continue to make sure we are as strong as we can be in continental Europe. We are not just focusing on one market.

"The client is at the core of what we do. The legal services market is diversifying. Increasing market share is clearly a priority and there is a premium on making sure a firm is being run efficiently. Opening our Glasgow office is a good example of one of our initiatives that aims to achieve this."

Simon Beswick, CEO, Osborne Clarke

On the market:
"Our results are still influenced by our corporate transactional practice. We have experienced two to three years of very lumpy and inconsistent activity. One quarter, we'll be having a great time and confidence will be high; the next will be quiet and workflow will be sluggish.

"Take last year, for instance. The first quarter was the best first quarter the firm has ever had – even better than 2006 and 2007 – so we thought perhaps that was a good omen and we had turned a corner. Yet September and October were really quiet."

Graham Stedman, senior partner, Nabarro

On the outlook:
"We are cautiously optimistic about the year ahead and generally I think market conditions seem to be showing tentative signs of improvement. The real estate market looks like it's starting to recover."

On the market and alternative business structures

"The rise of the ABS model is particularly interesting and while it may not affect larger commercial law firms compared with high street firms, it remains a factor that can increase competition. I'd expect that as a result, firms employing more sophisticated technology and looking at cost efficient ways of delivering services will attract focus from clients."

Guy Stobart, CEO, Kennedys

On the market:
"It is hard to predict the effect that the recent reforms, such as the cost reforms and the Jackson reforms, will have on the market. The fact that recently a significant reduction in the number of claims management firms has been reported can be seen as an indicator of the huge change happening in the plaintiff market. It would be unrealistic not to expect a knock-on effect of some kind from that change to the plaintiff market, but just how much is difficult to predict.

"This year will be about consolidating our position in our core market of litigation for insurance and claims and I'd expect us to grow faster than other firms. In our space in the market, where things are changing rapidly, you are either a firm which consolidates or one which will be gobbled up. I expect mergers and acquisitions to continue and we are definitely a consolidating firm with some momentum, our recent merger [with Gates and Partners] being an example of that."

David Harris, co-CEO, Hogan Lovells

On the market:
"We are seeing increasing interaction and interdependence between markets, as illustrated by the work we are doing in China and Latin America. Generally speaking, firms are looking at ways to differentiate themselves in an ever more competitive market, playing to their strengths.
"We are focusing on targeted expansion and leveraging the opportunities within our client base, in particular cross-selling clients between our US and international practices and targeting higher-value work."

Chris Saul, senior partner, Slaughter and May

On the market:
"We had a busier year, with levels of activity picking up well from October onwards. While M&A was patchy, there was a very encouraging flow of new instructions on financing, disputes, investigations and regulatory matters. We are excited, moreover, by the opportunities which we see internationally and the increasing interest in, for example, Africa.

"The legal market remains extremely competitive and that is unlikely to change over the coming year. So it is evermore important to stretch to provide textured and responsive service, and for every firm to focus on what makes its offering distinctive. We strive to do that."

Jonathan Watmough, managing partner, RPC

On trends in the market:
"I think we'll continue to see consolidation in the market as those firms that have struggled to differentiate themselves seek safety in scale and numbers. There may also be further law firm failure due to debt overstretch. We are now also seeing the magic circle going more aggressively after the mid-market, so I see that as a new and surprising trend."

Paul Rawlinson, London managing partner, Baker & McKenzie:

On the market:
"The market is quite fluid at the moment and no firm has an automatic right to be at that top table. A handful of firms have carved out a niche position at the very top of the market, but immediately outside of that group there is a bit of turbulence, either because they are overreliant on a flat UK market, or because they are investing in an international expansion programme that is costly in the short term but which they hope will deliver later on."

On the firm's UK approach:
"In some ways we are fortunate, if you look at the firm's history, in that we do relatively little UK domestic transactional work. Our client proposition has always been centred on cross border work, including emerging markets, and as such our issues are somewhat different to many of the firms operating in the UK space.

"All firms, whether domestic or not, need to focus on what their client proposition is, and really make sure they deliver on that. If you're looking to quickly get into new markets, a new office here or there might give you some international coverage, but it's very hard to instantly acquire scale. We have that; we are made to do cross-border deals, that's our fit."

Claire Rowe, CEO, Shoosmiths

On the firm's performance:
"We've had a good year where we have seen revenues up and witnessed good growth across the business, however, the market remains a challenging one and we'll continue with what we have been doing; listening to clients, understanding their business and providing good value along with an excellent client service."

On the merger with Scottish firm ACH:
"The merger and our move into Edinburgh was client driven and we're looking to grow the office and take advantage of the opportunities it has provided. We'll also continue to concentrate on growth in our main areas of corporate, real estate and commercial, continue to grow our teams, keep on being leading players, and replicate the growth we saw last year – our pipeline of work tells us we are capable of doing so."

David Kerr, CEO, Bird & Bird

On the outlook and adapting to shifts in client demand:
"I expect the market will continue to be tough and challenging. While there are reasonable signs of recovery, the legal market faces increasing pressure to provide services in innovate ways. We are living through a revolution of client demand and expectation, and change is something the legal profession has always been slow to do.

"Firms are finding there is a need to improve all elements of the client service experience, starting at the basic level of understanding what clients want and how to deliver it in terms of reporting, monitoring structures and billing arrangements. It's a change that has been building up for many years but is starting to come to a head, since the crisis fundamentally changed various types of work and use of technology systems. I think there are great opportunities to be had for firms that get right real innovation in client service."

David Ryan, managing partner, Pinsent Masons

On panel consolidation:
"We are seeing more opportunities in the market as a result of panel consolidation, where good teams from smaller firms are moving because – although these people are absolutely expert – panel structures can no longer accommodate firms with 'pockets' of excellence but little strength in depth. For that reason we don't intend to sit on our laurels. Having brought in Robbie Owen and his team from Bircham Dyson Bell already in the new financial year, I am sure more new faces will follow."

Oliver Brettle, London managing partner, White & Case

On deal flow in the market in the past six years:
"Comparing the UK and EMEA deal tables in 2013 and 2007 makes for very interesting reading. In 2007, you get the impression that UK headquartered firms were involved in the majority of deals, whereas now, you look at the league tables and see a greater number of US and international firms represented and involved in many of the biggest transactions.

"In M&A terms, law firms must ask what UK domestic work there is; it seems there is not much appetite for domestic expansion at the moment. If you are a UK company and wanting to expand by acquisition, you are going to be looking outside the UK for that, and get advice from firms with a true international presence when doing so."

On the magic circle and the firm's positioning:
"I think the magic circle firms are frankly well placed and we do see them working alongside us on a regular basis, as we do the other major international law firm players. Where we think we have a particular strength is in our global reach; we have been a strong firm globally for a particularly long time, with substantial overseas offices, with truly local practices as well as English law and US law capability around the world."

Michael Walter, Southeast Asia managing partner, Herbert Smith Freehills

On Herbert Smith's merger with Freehills:
"The standout feature for us over the last few months has of course been the merger of our two legacy firms and the creation of what is now, we believe, the largest fully integrated law firm in the Asia-Pacific region.

"That has not been without its challenges, and in southeast Asia in particular we have had to deal with the integration of the two legacy Singapore offices – we have been at the sharp end of our firmwide integration process).

"The merger has had its inevitable distractions and downsides, and around the world (including in the Asia-Pacific region) we have lost one or two people we would have liked to stay, but more importantly it has brought great successes – we have had measurable synergy results, such as work that the merged firm has succeeded in winning which the legacy firms may not otherwise have done, which have been incredibly gratifying."

Jeremy Hoyland, managing partner, Simmons & Simmons

On the market:
"There continues to be a significant difference in the levels of transactional and contentious activity. The market in Asia is more balanced. But in Europe and the UK, transactional volumes continue to be reduced, although contentious activity has remained strong."