It’s an easy case to argue. The likes of DaimlerChrysler and General Electric have already shown that they want global investment banks, accounting firms and advertising firms, which is why each of those fields has come to be dominated by a small number of multinational giants. Now it’s the lawyers’ turn, as their most lucrative specialties–such as merger and acquisition work–grow ever more active, more international and more competitive. Top law firms on either side of the Atlantic are rising to the challenge. “What we are seeing is an absolute scramble for internationalization,” says Alan Peck, chief executive of Freshfields, a top City of London firm.
But cross-border expansion is a challenge for any business, let alone one as culturally complex as lawyering. That’s why firms are pursuing so many different strategies. Freshfields is already one of the most international firms, opening its own offices from Ho Chi Minh City to Rome and teaming up with the Frankfurt heavyweight Deringer. Another route will be mapped out this month by partners at Rogers & Wells of New York and Clifford Chance of London, who are expected to agree on the first full-blown transatlantic merger. Together they would create a 2,400-lawyer firm, the second largest in the world. Other firms have been buying up local brainpower, especially in London, the financial capital of Europe. The London office of Shearman & Sterling has poached five banking specialists from a single City firm. American firms–always more generous–have been offering the smartest London rainmakers up to £1 million a year.
Much of the business these law firms hope to win is being done on the Continent, where a euro-fueled restructuring continues to gain steam. But don’t look for French or German or Italian firms in the legal superleague. All the world’s top-10 law firms–whether by head count or earnings–are English or American. Why? For one thing, the megadeals involve banking and accounting techniques that are more familiar to the Brits and the Americans. For another, the megadeals are increasingly governed by English or New York law. Besides, “clients are using us not just for our knowledge of the law but for our transaction-management skills,” says Tony Williams, managing partner of Clifford Chance, whose firm advised Volvo on the sale of its car division to Ford. Says Alan Hodgart, whose Hildebrandt International consultancy advises law firms: “On the Continent the lawyer is the arm’s-length technical expert who just says, ‘You can’t do that, come back with another idea’.”
So it comes down to a British-U.S. competition. Will this one end as the global battle of the banks did–with Americans dominating? The Americans used to be considered the more aggressive. Not anymore. Says Bruce Buck of Skadden, Arps, Slate, Meagher and Flom: “When I came to London in 1983 you could call a leading City firm at 7 in the evening and get the security guard. Those days are long gone.”
It was the English–with a smaller home market–who led the charge into Europe. Many U.S. firms still haven’t ventured farther than London, where they concentrate on high-margin international work, aided by their close ties to U.S. investment banks. The Yanks will also have to show more staying power this time than they did in the ’80s, when they expanded dramatically, only to retreat when the deal market went quiet. Still, it’s reckoned that the number of U.S.-qualified lawyers working in Europe has risen 50 percent to 1,800 over the last three years. What’s more, expansion has often meant the mass recruitment of local talent. “We need more lawyers every day,” says Nadine Janiv at the Paris office of New York-based Jones, Day, Reavis & Pogue, which has doubled its strength in the last four years. And the French thought they needed to worry only about McDonald’s and Mickey Mouse.
