Big Law's Favourite (And Least Favourite) Cities
Data shows the world's largest law firms are disproportionately weighted towards just a few key markets, writes the Global Lawyer.
June 16, 2024 at 05:00 PM
5 minute read
The Global LawyerLast week saw several big court decisions in disputes around the world.
A Florida jury ruled that Chiquita Brands International is liable for murders committed by death squads that the banana grower paid protection fees to in Colombia. And a Canadian court ruled that Ukrainian International Airlines must pay compensation to the families of those killed in the downing of its airline over Iran in January 2020.
But it was a decision of a different kind that threatened to further disrupt the legal industry when three judges decided to step down from Hong Kong's highest court.
Beverley McLachlin, Canada's former chief justice retired from the court just days after two British judges quit in the wake of the conviction of pro-democracy activists under the city's national security law.
One of the British retirees, Jonathan Sumption, wrote in the Financial Times that he had stayed on the court hoping that the presence of overseas judges would help sustain the rule of law but quit because he feared that was "no longer realistic".
They are not the only ones to give up on the increasingly desperate situation in Hong Kong and China. It is only a little over a month since Law.com International broke the news of Mayer Brown's divorce from Johnson Stokes & Masters—once one of Asia's most coveted, home-grown firms—after 16 years. Over the past 12 months, at least eight U.S. law firms have closed or have announced that they will be closing offices in Greater China.
The question now is where law firms situate their Asia headquarters, and indeed whether they need such a substantial Asia presence at all.
Many firms have decamped to Singapore, which now has two Global 200 law firm operations with more than 100 lawyers in, compared to Hong Kong's four. But questions remain about Singapore.
India, the world's most populous nation, holds huge promise in a market ripe for consolidation, but international law firms are still waiting to see progress on the liberalisation of the country's legal market.
Perhaps they can learn lessons from the slow liberalisation of the legal market in Saudi Arabia, where the government is now consulting on plans to relax restrictions on foreign law firms in a significant change that would allow partners to establish fully non-Saudi-owned and operated offices in the Kingdom.
This is just the latest in a long line of changes that have led to Saudi growth. And yet for all the talk of law firm launches in the country, it remains a small market for now. Nearly two thirds of lawyers working at the largest law firms in the Middle East are based in Dubai.
And even then, for all its progress and sparkle, even Dubai can only boast one Global 200 law firm office with more than 100 lawyers.
All of which points to a bigger picture showing how much the leading law firms are prepared to invest in financial centres around the world.
The idea that the largest firms are truly global is little more than a marketing gimmick. And not only are they fairly selective about their countries, they are disproportionately weighted towards just a few.
Analysis of Law.com Compass data shows there are actually a very small number of places where the biggest firms have a sizeable presence.
Unsurprisingly, in the U.S. there are several cities that boast many firms with more than 100 lawyers—led by New York and Washington DC.
London also has 61 Global 200 firms with more than 100 lawyers based there.
But then the list falls away sharply. With the exception of Paris and Sydney, not one major financial centre in the rest of the world outside the U.S and the U.K. has more than 10 Global 200 firm offices with more than 100 lawyers.
Why so concentrated? U.S. and U.K.-based law firms benefit from being based in common law jurisdictions, which likely makes them more profitable. Both also benefit from their strong private capital industries.
While the U.S. is the world's largest economy, London remains the centre for the wider European private capital market. When leading Spanish firm Uría Menéndez closed its New York office last month it explained that U.S. private equity firm mandate decisions for Europe were typically made in London, which has encouraged it to focus its efforts on the U.K.
That's also why London is such a competitive hiring market, especially for private equity partners.
This is not to say that firms are not dedicated to other regions, just that certain places are more lucrative than others. It's not the way law firm leaders would describe it, but as far as their strategy is concerned their favourite cities tend to be those close the Atlantic.
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