Corporate Britain has long been the preserve of elite British law firms. Even as recently as 10 years ago the law firms with the most FTSE 100 clients closely mirrored the top part of the U.K. Top 50 table.
But since then, U.S. and Transatlantic law firms have been slowly inching their way up the FTSE tables, provided by Adviser Rankings.
The change might not be enough to worry the leaders. Slaughter and May continues to maintain a clear lead, with 33 FTSE 100 companies as of 2022 including the likes of Diageo, British American Tobacco, GSK and Prudential. It is followed by Linklaters, Freshfields Bruckhaus Deringer, Allen & Overy and Herbert Smith Freehills—the same five top firms as in 2012.
Yet the number of U.S.-headquartered firms or Transatlantic firms that feature in the lower part of the annual table of 21 firms has increased significantly.
In 2012, the table featured only three U.S. or ‘Transatlantic’ law firms—Hogan Lovells, Davis Polk & Wardwell and Jones Day. Ten years on, that same ranking features eight such firms—Eversheds Sutherland, DLA Piper, Norton Rose Fulbright, Hogan Lovells International, Mayer Brown, Baker & McKenzie, Sullivan & Cromwell and White & Case. Notably, five of those did not feature in 2012.
There is limited information on which specific clients are using these newcomer firms. Clients for White & Case include Smiths Group and Avast, according to the data.
Many of the largest companies continue to use the largest U.K.-based firms. Clients for Linklaters include Barclays, BP, and BAE Systems, according to the data, while A&O advises HSBC, Lloyds and Natwest and HSF works with Anglo American, National Grid and Rio Tinto.
Newcomers to the list say their progress is partly due to their heavy investment in lateral partner hires from the top U.K. firms. Philip Broke, the EMEA section head for M&A and corporate at White & Case, who joined from Ashurst in 2006, commented: “Lateral hires are not a necessity [to growing a successful M&A practice] but they accelerate the process”.
Fellow White & Case partner, Margot Lindsay added: “The team of M&A partners have come from Slaughter and May, Clifford Chance, Ashurst and Linklaters etc and are experienced in providing advice to listed companies across a number of areas. Sure, we work on the big M&A transactions, but we also help with the day-to-day listing rule compliance, corporate governance, ESG matters, preparation of annual reports, etc—matters for which listed companies may have thought they needed to go to Magic Circle firms for advice. We can offer that too.”
Baker McKenzie also saw lateral hires as a key part of its strategy. Corporate partner Adam Eastell, who previously worked as a partner at Slaughter and May, noted how “U.S. firms have been hiring quite aggressively from Magic Circle firms” and that such a “dynamic can accelerate the trend” of clients choosing to use them.
Another advantage the U.S. firms claim to offer is a more internationally-oriented approach. Broke explained: “A lot of U.K. FTSE100 companies tend to be larger, they are not just U.K. businesses but global and want international services. These companies will likely work with U.S. firms in the U.S. and depending on their businesses, the companies will have U.S. legal needs. With full-service corporate practices in the U.S. and London we can offer these companies the best of both worlds.”
‘Not a wider trend’
But not everyone agrees with the data, nor the notion that U.S. firms are taking market share.
Some partners question the methodology and say some firms’ numbers are under-reported. They also make the point that the rankings do not specify lead counsel, so it is easy for firms to improve their rankings by doing small or less lucrative work for these clients.
Nick Williamson, head of corporate at Ashurst, which according to the data lost two FTSE 100 clients over the past 10 years, did not think such changes signaled a wider trend and added that offering certain types of advice was not evidence of a proper client relationship.
He said: “To look after a listed company you need to have that full service offering, for example, employment options, corporate governance and other skill sets. Listed company relationships with law firms are often long-standing relationships where there are multiple points of contact between a listed company and law firms and a history of working together.”
“While there are some U.S. firms that work with listed companies, U.K. headquartered firms will probably continue to have the strongest relationships with listed companies.”
Nevertheless, opportunities for a variety of firms to win new clients will continue to emerge if only because partners continue to retire.
Clifford Chance’s joint head of corporate, Melissa Fogarty, one of the only U.K.-headquartered firms to have made notable increases over the last 10 years, attributed the firm’s progress to a combination of factors, but added retirements have helped play into the firm’s growth: “Our reputation for providing high quality strategic advice to corporates is well established. We’re also seeing some movement in client relationships between the firms. There has been something of a generational shift over the last five years, with lots of big names at firms retiring and some firms struggling to fill the gaps. That has created opportunity for us.”
In 10 years, Clifford Chance has more than doubled its number of FTSE 100 clients, going from 7 to 16, which Fogarty, put the down as a “concerted effort” by the firm to build up its corporate client base.
Indeed, in its most recent financials, the firm published a breakdown of its revenue by client segment which showed that while in 2015, the banks represented 38% of the revenue share, in 2022, the banks now only represented 27%. Meanwhile corporate revenue share is now at 32%.
Fogarty added: “We are committed to investing in growth in this space.”