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Global 100 debate: the view from the top

Alex Novarese, Legal Business: How are market conditions looking now?

David Bickerton, Clifford Chance: Too early to tell. Clearly there was a pent-up demand leading up to the referendum in June. What is interesting is whether all the optimism that partners are feeling will manifest itself in transactions come the fourth quarter.

Alex Novarese: For the year as a whole how has it looked?

David Bickerton: Fine. For all of us around the table it will be different. The blend of your business is different. In the UK Brexit is a massive issue, in Asia and the US it is frankly far less so. The question for everybody is that there is an awful lot of uncertainty around, and how that shakes out on confidence is incredibly important.

Alex Novarese: Steve, how is it looking for your business?

Steve Immelt, Hogan Lovells: We saw all the up and down in London, but the US has been pretty robust. There has been less regulatory activity, which you would expect in a presidential election year, but the deal flow has been pretty strong. Not as strong as last year, but reasonably good. Europe is continuing to outperform all expectations. That has been the surprise.

Alex Novarese: Often you hear people talking about Germany being difficult to operate in profitably, but that is not your experience?

Steve Immelt: Not mine, no.

Alex Novarese: Ed, you have a fairly large German practice. How is it looking out there?

Kim Koopersmith, Akin Gump: Clients expect to see their firms working well together and sharing information

Edward Braham, Freshfields Bruckhaus Deringer: It has markedly picked up over the last nine months. Very strong and very active.

Alex Novarese: What does Brexit mean for London?

Natasha Harrison, Boies, Schiller & Flexner: It is important that we see this as an opportunity to re-emphasise and reshape London as a centre for legal issues. I do not see any of my clients starting to write their contracts in German or French law and subject to the jurisdiction of those courts. I speak as a litigator. There is an opportunity to refresh the value of English law as a sensible law to apply to contracts, but also the English courts as a neutral forum for resolving disputes.

Alex Novarese: Is London holding its position as a global disputes centre?

Natasha Harrison: Absolutely. To me, the key jurisdictions are London and New York. The types of cases we work the clients would always want to be in those jurisdictions, whether through arbitration or litigation. In that, the Financial List is a real string to our bow in England.

Edward Braham: At the end of the day you have got two international laws: English law and New York law. English law is directly enforced on the Continent and New York law is not, and that will remain the case. That very fundamental point is going to ensure English law stays at the forefront.

Kim Koopersmith, Akin Gump Strauss Hauer & Feld: Litigating in the US is still understood to create uncertainty and discovery burdens. I do not see English law becoming any less relevant, frankly.

Alex Novarese: Will American law firms keep investing heavily in London?

Charlie Geffen, Gibson, Dunn & Crutcher: It is the US regulatory system, the Department of Justice, the Securities and Exchange Commission and all of that which provides the US firms with such a big opportunity outside of the US. Any organisation that gets anywhere near the dollar is going to have to consider that.

One cannot help but feel that if Brexit happens, London will still be a very important place, but less of a place than if we had stayed within Europe. You look at the G20 and Obama says: ‘Our first priority is to negotiate EU trade. Once we have done that we will talk to you.’

Barney Reynolds, Shearman & Sterling: I disagree. Obviously that is Obama’s view, but I am not sure it will reflect what happens next. If the UK liberalises, rekindles its relationship with the Commonwealth and gets a satisfactory relationship with Europe, which I think it will do, I do not see that it will be a worse position. It could be a lot better.

Alex Novarese: As a regulatory specialist, Barney, what is the feeling that you are getting from clients on Brexit?

Barney Reynolds: Everyone has contingency plans. A lot of more junior people have been running around concerned. The very senior people have been quite sanguine and relaxed, watching to see what happens. People are starting to see this could be a big opportunity for the financial markets, with a reboot and rationalisation of a series of regulations which have gone way too far.

Alex Novarese: You are not seeing or expecting an exodus from London?

Barney Reynolds: No. There are certain areas like primary insurance where there might be some business model adjustments that end up being required. However, we did not have passporting in the early 1990s and the City operated fine. Passporting has only properly been in operation since 2007. It is a very recent phenomenon, so I do not see it as being as impactful as many fear if it is removed.

Edward Braham: London is a global financial centre. That is a resource which Europe very badly needs, as do we. It is more likely than not that you wind up with a very strong financial centre here because it is in everybody’s interests.

Steve Immelt: London will continue to be the same centre it has been. The notion that it is going to flow to Frankfurt or Dublin I do not see.

Alex Novarese: Nick, are you still seeing people wanting to make short-term investments in London?

Nick Shilton, Shilton Sharpe Quarry: We have not seen any noticeable downturn in firms’ appetite to hire in London, whether US or UK. If you go back to the financial crisis, roles were being pulled left, right and centre. That does not seem to be recurring this time. The market at associate level has held up and the partner wheel spins ever faster.

Alex Novarese: How are clients expecting elite global law firms to change how they deliver services?

Charlie Jacobs, Linklaters: At top end of M&A, deals have got bigger and much more complicated. In the old days if you looked at the fees you could generate on an M&A transaction it was reasonably limited to single-digit type stuff. That is not the case on these top deals.

Clients expect a multi-partner team that is very hands-on, with much less gearing. They say: ‘Give me the Rolls-Royce service and I will pay you properly for it.’ The old, one partner, with a whole load of associates, is not the model any more.

Alex Novarese: So complexity is offsetting to a certain extent that downward pressure on fees?

Charlie Jacobs: Yes, at the top end. Then falling away from there is a whole lot of more mundane stuff. You have to work out what you are happy to let go and what makes sense for your client and for relationship reasons. Being honest with the client works best. They enjoy that dialogue.

Steve Immelt, Hogan Lovells: There are lots of algorithms that need to be written before AI in law lives up to the hype. Who will pay for that?

Alex Novarese: Do rainmakers still matter, or is global law becoming more of an institutional business?

Steve Immelt, Hogan Lovells: There are lots of algorithms that need to be written before AI in law lives up to the hype. Who will pay for that?

Charlie Jacobs: Yes, they do. If you were a client and had a really tough deal would you say: ‘I will just give any of the top ten firms a call and take the next cab (ie partner) on the rank’? Or would you say: ‘There is a certain sort of deal and I want the partner and firm team I like and that I have a rapport with?’ Personality comes in and certain clients like a certain style of lawyer. They will often see people across the table and say: ‘Next time I want that person on my side.’

Edward Braham: Relationships have always mattered and they matter more than ever. As Charlie says, things are more complex, but at least as important is that the risks involved in what we do these days have themselves become more complex. Alongside that there is increasing recognition that part of what needs to be done is more predictable but needs to be done on a big scale. It needs to be done faster and cheaper.

Alex Novarese: Freshfields has made a big commitment with Manchester. Will the model change radically or is that enough for the next five to ten years?

Edward Braham: I come at it from trying to improve service delivery. This is about doing a job better, faster and cheaper.

Barney Reynolds: Or not doing it. Wall Street firms do not touch that work at all.

Charlie Geffen: The English firms drove their profitability through leverage for perfectly good reasons. I certainly agree in terms of the increasing separation of advice and pure execution. There is a core bit of documentation that you have got to be all over, but we all know there is an awful lot of other bits which can be done more efficiently, probably, by other people.

Edward Braham:When I am talking about doing things which are better done by process, that is in the context of exactly the sort of M&A or capital market deals you would expect us to be doing. It is not to take on work we would not otherwise be doing.

Alex Novarese: Dentons has been looking at new models and technology. What is your read on this?

Elliott Portnoy, Dentons: We have a structure that makes it easier to navigate some of these issues, as some of the decisions competitors make are driven by a fixation on PEP. We do not believe a meaningless statistic should drive a global firm. The result is that multiple parts of our firm are able to take work that is more diverse and allows us to institutionalise the client work. The work could be done in Singapore, China, Canada or Europe and the US in a very profitable way. Our clients generally will not be satisfied with a response from us of: ‘We will do this slice of your work and nothing else.’ They will go down the street.

Juan Picón, DLA Piper: I look at my own market, Spain. Charlie is right: the top deals probably are immune to this. However, very shortly below things are challenging economically. We just announced a deal with Freshfields, acting for CVC, for $6bn, which for Spain is a big deal. They do not even use an investment banker for that transaction and they are looking at fees very carefully. The economic model in some of our markets, maybe not London or New York, is changing.

Charlie Jacobs, Linklaters: Clients expect a multi-partner team that is very hands-on. The old, one partner, with a whole load of associates, is not the model.

Alex Novarese: Ten years ago a lot of the London firms were trying to get bigger. Then that goal changed. Do you think that many elite global firms may well be 25% smaller in five to ten years from now? DLA had much more of a focus on being bigger years ago.

Juan Picón: We now clearly need to move from quantity to quality. We have too many lawyers and we need to optimise resources, even in London.

Steve Immelt: One aspect of scale is scale of the clients’ own legal capabilities. That has had a huge impact. No one would be surprised that Novartis has 1,000 lawyers in-house. You might be surprised Google has 800, and these are high-quality lawyers. The scaling up of in-house legal departments is changing things.

Charlie Jacobs: You are right. We talked about rates in Germany earlier and one of the reasons German recoveries have been lower than say the UK for a lot of firms is due to very big and competent in-house teams. What all these legal teams will say to you after a while is: ‘We have lots of people but what we do not have is visibility to what is going on in the market. Your value-add is that you can help us understand where the market is.’

Kim Koopersmith: We are also seeing a greater expectation among clients that the law firms that handle their work will work together. They want to know that you are prepared to work collaboratively with another law firm on their panel. They define that as sharing information, sharing what you did in the last transaction or litigation that was successful, and are grading you on whether you play well in the sandbox.

Alex Novarese: Is that realistic?

Kim Koopersmith: We are all fierce competitors but we also all recognise that the name of the game here is client satisfaction and this is part of client satisfaction.

Natasha Harrison: I was interested by the comment that clients want a firm that does everything. We are seeing the opposite. We are being brought in to co-counsel with what is probably the best corporate team in the City to work with on the litigation side. Clients are de-packaging legal services and taking the best structuring and best finance teams and matching them with the best disputes team, while expecting absolute collaboration.

Charlie Geffen: Where it works well is when the client is very clear that it is getting different things from different firms. Where it goes wrong is where the client tries to book three similar firms.

Charlie Geffen, Gibson Dunn: If Brexit happens, London will still be a very important place, but less of a place than if we had stayed within Europe.

Steve Immelt: Clients have also become increasingly sophisticated about how they look at data. They are beginning to develop a template about what this should look like. You are being compared to their norm. That will drive change.

Alex Novarese: In-house teams are expanding. It seems that is threatening to global law firms because there is more of a barrier between the law firms and the chief executives or the board. Am I wrong to see it that way?

Elliott Portnoy: I think you are wrong. We are developing partnerships with counsel while the demand for better, faster and cheaper puts all kinds of stresses on our teams. We are in the end left with far stronger and deeper relationships with our clients because of the conversations that now are welcomed by some of us and perhaps forced on others.

Alex Novarese: But in-house legal teams ultimately want to be at a point in the value chain and they want law firms in many cases to be beneath them. I hear conversations with general counsel along those lines.

Elliott Portnoy: I see this as a great opportunity. Clients are demanding change and those of us that are providing innovation and new solutions are frankly finding a pretty welcome audience.

Nick Shilton: Possibly a greater challenge is there is a level of dissatisfaction within private practice for both associates and partners. We very rarely hear gripes from in-house lawyers. We see on an ongoing basis significant outflow of great talent from private practice to in-house resulting in ever-stronger in-house legal teams.

‘Where does law matter the most and which law matters? Some of the bets about the profession have turned out to be significantly incorrect.’ Barney Reynolds, Shearman & Sterling

David Bickerton: An awful lot of very able people who are not suited to it end up in law firms. A lot of people get encouraged into this job because their parents want them to do it. The fact that they leave is good because what that means is the people you have left are the people that have a natural talent and empathy with the clients, and are prepared to deliver in these 24/7 terms.

Charlie Geffen: If you look at it from the other end of the telescope, the global legal market is $650bn, and we know half of that is in the US, but the biggest law firm in the world makes $2.5bn. It is a hugely fragmented industry; therefore, it must be enormously inefficient.

Nick Shilton: If we tore up the Global 100, ripped it in half, removed half the firms overnight, how many of the clients would complain that there are not enough law firms and not enough competition? I suspect that it would be somewhere between ‘very few’ and ‘zero’, because there is still massive choice.

Steve Immelt: The drive for most firms has been to consolidate to fewer firms. There is a lot to wring your hands about, but echoing Ed’s comment, there is so much complexity out there today: 25, 30 years of active global expansion by business enterprises has created a world of huge complexity. You can go in a board meeting in Kansas City and end up having to do an investigation in Indonesia. I do not see that changing.

Natasha Harrison: Because of the complexity, what clients are looking for are partner-led teams and active lawyering and problem solving by teams of the best in town. Complex issues cannot just be delegated to the fifth associate in line. That is an interesting shift to the models for some of the firms here.

Alex Novarese: How important has it become to think about quality of life for the associates and the partners?

Kim Koopersmith: With a fifth-year associate daughter, I can tell you that concerns with work/life do not seem to be permeating to us redoing the business models. The real driver is: are you getting great work, liking the clients, and liking who you are doing it with? If you can achieve that, your retention rates will be strong.

Natasha Harrison, Boies Schiller: There is an opportunity to refresh the value of English law and the English courts as a neutral forum for resolving disputes.

Charlie Jacobs: When I joined Linklaters, we had no in-house catering at the weekend. There was no medical. It was pretty basic and hard core. Firms like ours now recognise that people work hard, and you need to look after them. I am not pretending the job has become any easier, but firms are more responsible now in trying to provide a better environment. Most people come here as young students and they are pretty blown away by the infrastructure in some of the law firms like Linklaters. To go back to the in-house counsel, these teams are not working any less hard yet many do not have that big firm back-up and infrastructure. We see some of the in-house people coming to the office saying: ‘I wish I worked somewhere like this.’

Steve Immelt: And you are still in a lawyer-centred enterprise. In business, you may be closer to the decision makers, but believe me, the legal function is not what they are about.

Stuart Fuller, King & Wood Mallesons: This next generation of lawyers will force us to change. Why would you study for five years and come and spend three months doing a discovery on a litigation, or a change of control due diligence on an M&A transaction, when you can have a piece of technology that can do that more efficiently? The next generation of lawyers that come in and will say: ‘I am not prepared to do that kind of work.’

Alex Novarese: Don’t people have an exaggerated view of how tech savvy younger generations are? It is just different technology; we get used to the technology we know, that was dominant or changed the world when we were at a formative age.

Stuart Fuller: If you want the best talent, and you do not change your business model to do things, whether it is better, faster, cheaper, or in a more efficient way in a technology sense, the lawyers will go to a firm that does that. That will force the change.

Charlie Geffen: There was a great story of a big US corporation that had its law firms present and the general counsel comes in, waves a 60-page agreement at them, and says: ‘How much would you charge to do a three-page summary?’ They say: ‘$2,000.’ He brings in a scanner, feeds it through, and three minutes later a three-page summary comes out, and he says: ‘I can tell you that this software is 92% accurate, and your associates are 85% accurate.’

Elliott Portnoy: This is where size really matters. What happens to those mid-size firms that are hoping to chomp at our heels, but cannot make the investments in technology we can? If you go and talk to a group of law firm leaders of the mid tier, whether in the UK market, US, Canada or elsewhere, they live in fear of these changes because if there are three, or five, or eight initiatives that are necessary, they may be able to afford one. We can all afford eight.

Stuart Fuller, King & Wood Mallesons: We see hyper levels of competition in Asia, and at some levels in the Hong Kong market it is a game of mutually-assured destruction.

Steve Immelt: There was this great diagram showing the surge of hype and the trough of disillusionment. We are somewhere between the top of the hype cycle and the trough of disillusionment.

But then ultimately technology begins to be useful, and clearly the document creation and document review technology is very good and sophisticated. A lot of other things people are talking about are not ready.

Alex Novarese: Not impressed with AI?

Steve Immelt: I am very impressed with AI, but if you want to talk about what it can do today, compared to what people are hyping, there is a big gap. Will it close? Sure, at some point; there are a lot of algorithms that need to be written. It is not clear to me who will pay for all that. Maybe PwC; those are firms that may have the capital to push some of this forward, but there is still a big gap.

Alex Novarese: I was not planning on talking about the accountants, but any thoughts?

Steve Immelt: In the US they are not a threat at all. As long as Sarbanes-Oxley is there.

Juan Picón: In Spain they are investing like crazy. They realise the model, which is based primarily on audit work, is being squeezed and the upside potential on tax and legal is significant. There are some markets where they have restrictions, and some others where they do not have them, and they are just investing heavily.

Elliott Portnoy: They are moving up that value chain very quickly and attracting talent that a few years ago would never have thought of it – not in the US market, but virtually every other market where we are, and they have something we do not have, in addition to the investment capital: the kind of brand recognition with clients that no law firm has. We regard them as a significant threat.

Charlie Jacobs: In the UK we do not see it. Also, clients respect that division of responsibility. They like saying: ‘I have my lawyer, my accountant, my banker, and I respect each of your views. Stick to your core business.’ In the UK we have seen this movie before: they invested heavily, then pulled back, and are now going back in. As long as they keep going in and back out, in out, it is OK.

Alex Novarese: Stuart, let’s turn to Asia. How is it looking out there?

Stuart Fuller: The market is incredibly strong. It is becoming more complex everywhere to do business, and in Asia it will develop in its own way. If you look at the use of technology in law, we would see stronger technology apps coming out of the Chinese part of our firm than the Western one. This is particularly true for data mining, data use, predictive technology, but also dual-language technology.

Also you have an incredible growth in business. We do not see any slowing in Asia at all. We see hyper levels of competition, and at some levels in the Hong Kong market it is a game of mutually-assured destruction. We all say we do not compete on price but in some markets we do. If you look in the capital markets in Hong Kong, we all know that we are doing it for brand and relationships, not profit. We have to flex the model to make it as profitable as possible.

David Bickerton, Clifford Chance: An awful lot of people who are not suited to it end up in law firms. The fact they leave is good.

Alex Novarese: Is your Chinese business still growing at a 20-30% clip per year?

Stuart Fuller: Compound, yes. Elliott would say the same. It is stronger year-on-year, and the complexity and the quality of the matters is growing bigger. China is three markets: inbound work, which is pretty flat; outbound work, which is significantly up; and the domestic market, which is even more significantly up.

Elliott Portnoy: In the outbound market in particular, for global firms, it becomes especially attractive. We have got 43 offices in China, and the single biggest driver for global revenue is both private and state-owned enterprises in China, who need a place to park their resources, and who are extremely acquisitive all over Asia but also in Europe and the US. The China outbound has been dramatic.

Alex Novarese: Looking at the level of referrals that Dacheng would put into the US business of Dentons, does that take time to build, or is there already a lot?

Elliott Portnoy: We hope there will be multiples in time, but there are single litigation matters that are already eight figures. It does not take a lot of those matters to dramatically enhance a region’s revenue.

Alex Novarese: Would there be more than $30m per year coming to Dentons’ US arm from China’s referrals or are you not at that level yet?

Elliott Portnoy: No, we would be.

Alex Novarese: India liberalisation? Personally, I’ll believe it when I see it.

David Bickerton: It is two years away. Always two years away [laughs].

Nick Shilton, SSQ: We see a significant outflow of great talent from private practice resulting in ever-stronger in-house teams.

Alex Novarese: Ed, how close do you feel you are to having what you need for the long haul in terms of US coverage?

Edward Braham: We are winning exactly the sort of work that we always targeted. It is capable of doing anything we need to do. We would like it to be a bit bigger.

Alex Novarese: Charlie, many would say that it is a real issue for the Magic Circle to not have critical mass in America. How do you feel about it?

Charlie Jacobs: You need to be honest about where you are strong. Linklaters’ traditional backyard would be Europe, and we are very pleased with what we have there. Brexit makes you glad that you have diversification across Europe in the model. In Asia we have our 40th anniversary coming up in Hong Kong, we have been there a long time. That counts.

In the US, we are there and have a good set up: would we like to be bigger? Yes, but we have seen a lot of people lose their shirt. The mistake is to get into a herd mentality and think: ‘I will just chase US growth and hire and hire.’ We would all like more US revenue but you do not have to be all things to all people in the US.

Alex Novarese: I’m assuming that Brexit naturally pushes the UK economy and London a little bit closer to America, if you weaken the trade links to Europe.

Edward Braham: That is right. We correlate better to the US than we do to Europe, already.

Alex Novarese: How much of a challenge is there for London-bred firms in terms of the weight of the US legal market?

David Bickerton: The key is to pick your battles. It is incredibly difficult from a non-US centre to set up a full-service US law firm, and it is not necessary. You pick your specialities, make sure that you excel at those, and then as and when you grow from there, what you do is to draw the dots between them, rather than trying to take it all in one step.

Edward Braham: One of the reasons we grew the US was that we are acting for major US companies around the world, and very often the work they are doing in the US might be domestic when you first look at it, but the difficult issues are around the world. The logic of having the US and international work together in the same firm is very strong.

Alex Novarese: A final point: for high-end global firms, what is the biggest opportunity out there over the next three to five years?

Charlie Geffen: The weight of US regulation now is so important, and it is scary. Whether you like it or not, it is the most egregious extra-jurisdictional country in the world. Wherever you are, if you are anywhere near the dollar, you cannot but take into account the best advice you can.

Edward Braham: The opportunity comes from clients looking for yield and growth in a market that is well short of both, and that is driving people to do things they are not so familiar with. They are very often having to do things that are just plain hard, and that plays to our strengths.

Charlie Jacobs: There is a challenge around law firms having a partnership structure. You pay the money out each year. You need to choose the markets you want to play and where you can get the returns you want while not ignoring developing markets that may not be as profitable but you need to invest in them for the future. The days of being all things to all people have probably gone.

Barney Reynolds: The main question is: where does law matter the most and which law matters? High-stakes litigation, particularly in the US and UK; regulatory enforcement; M&A; capital markets and other transactions, especially in London and NY and under English and NY law. I am intrigued by the Asia story. Law does not matter to the same degree in many places and then not all laws matter to the same degree either, so you cannot make the same income out of all forms of it everywhere. You are seeing some big shifts going on under the surface. Some of the bets as to where and which law matters have turned out to be at least partially but significantly incorrect.

Alex Novarese: That seems a reasonable point to conclude. Thank you for your time.


  • Alex Novarese Editor-in-Chief, Legal Business (chair)
  • David Bickerton London managing partner, Clifford Chance
  • Edward Braham Senior partner, Freshfields Bruckhaus Deringer
  • Stuart Fuller Managing partner, King & Wood Mallesons
  • Charlie Geffen Chair of London corporate, Gibson, Dunn & Crutcher
  • Natasha Harrison London managing partner, Boies, Schiller & Flexner
  • Steve Immelt Chief executive, Hogan Lovells
  • Charlie Jacobs Senior partner, Linklaters
  • Kim Koopersmith Chair, Akin Gump Strauss Hauer & Feld
  • Juan Picón Co-chair, DLA Piper
  • Elliott Portnoy Chief executive, Dentons
  • Barney Reynolds Financial institutions co-head, Shearman & Sterling
  • Nick Shilton Chief executive, Shilton Sharpe Quarry
  • Mark Wagner Director, Shilton Sharpe Quarry