The Legal 500 UK 2009
...since 1988, the largest and most in-depth survey of the UK legal market
Editor's selections from The UK Legal 500...
London - Corporate and Commercial
The decline in the corporate market over the last 12 months has been swift and dramatic. What started with cracks in the US sub-prime mortgage market has exploded into one of the deepest recessions in living memory. Chronic illiquidity, unstable asset prices and lack of investor confidence conspired to burst the seemingly endless bubble of top-end transactional mandates. The collapse in September 2008 of Lehman Brothers - at the time the world’s fifth largest investment bank - was a significant tipping point, with many firms seeing dealflow dry up overnight.
The City’s beleaguered corporate teams have been forced to adapt. With premium new-money transactions thin on the ground, distressed deals have come to the fore, and a lack of conventional M&A has also seen corporate lawyers working alongside finance teams on restructurings and insolvencies. Clients are exerting pressure on pricing, and reports of ‘lowballing’ are widespread as firms attempt to keep utilisation rates high.
Against this background, our corporate rankings remain largely unchanged. The City elite - Allen & Overy LLP, Clifford Chance, Freshfields Bruckhaus Deringer, Herbert Smith LLP, Linklaters LLP and Slaughter and May- continue to dominate proceedings, and once again comprise the top two tiers of both Mergers and acquisitions and Equity capital markets: UK capability. However, with leveraged transactions one of the principle casualties of the credit crunch, Clifford Chance’s reliance on private equity has seen it fall back to the second tier in M&A following its promotion last year. These top firms are also increasingly dipping into the already fiercely competitive mid market.
South West
Bristol is often seen as a difficult market to crack due to the presence of top-quality, full-service firms such as Burges Salmon LLP, Osborne Clarke and TLT LLP. Many firms expect consolidation in the market due to economic uncertainties. There have been well-publicised redundancies at many of the region’s firms, with property practices hit particularly badly and many high-value deals shelved due to a lack of available leverage. Firms are increasingly seeing mandates shift into insolvency and corporate recovery and expect to experience a significant increase in dispute resolution and professional negligence claims.
London - Finance
The turbulence in the financial markets in 2008 was epitomised by the historic demise of Lehman Brothers; the ramifications of this event were felt throughout the markets and caused a paralysis in the flow of credit. The effect on law firms has been widely reported, with many experiencing widespread redundancies. Firms that have coped best with the implosion in the markets have been those less regimented in their approach to finance, with the flexibility to adapt to the conditions. Against this background, the Magic Circle firms continue to lead the way, with Allen & Overy LLP, Clifford Chance and Linklaters LLP appearing in the top tier of the majority of the categories in this chapter. However, as the value of deals migrates downwards, there is increased competition in the mid-market, and firms with a strong regional base, and the ability to compete on cost have become increasingly attractive propositions to clients facing their own cost pressures.
Yorkshire and the Humber
Home to the ‘Big Six’, Leeds is a closely fought market which many claim has reached saturation. However, this has not deterred a number of recent new entrants, including Ward Hadaway and DWF LLP. Distance from the capital has afforded the main regional legal centres with little protection, and the downturn continues to bite hard in Yorkshire with redundancy announcements increasingly common. The recession has already claimed its first victims, including Fox Hayes LLP, which folded at the beginning of 2009.
London-Dispute Resolution
Given the counter-cyclical nature of dispute resolution, the current global economic downturn would seem the perfect environment for practices in this area. Certainly the number of reported enquiries has risen, and these are slowly translating into concrete instructions, but the tsunami of litigation that was predicted in some quarters has yet to arrive.
Thus far, the main beneficiaries have been those firms with strong backgrounds in banking and commodities, sectors which were the first victims of the fallout of the credit crunch and the resultant downturn. The former category is largely made up of Magic Circle and major City firms, such as Allen & Overy LLP, Clifford Chance, Freshfields Bruckhaus Deringer LLP, Linklaters LLP, Herbert Smith LLP, Lovells LLP, Simmons & Simmons, and Slaughter and May, all of which have excellent track records in financial services related disputes. In the latter, firms with strong experience in areas such as shipping, including Clyde & Co LLP, Ince & Co, and Holman Fenwick Willan LLP, have benefited from an uptick in disputes, thanks largely to major fluctuations in commodities prices.
Scotland
Edinburgh and Glasgow: The country’s transactional landscape has long been dominated by the so-called ‘Big Four‘, although the gap in turnover between the largest, although the gap in turnover between the largest, Dundas & Wilson CS LLP, and the smallest, Shepherd and Wedderburn, continues to widen. The group is completed by Maclay Murray & Spens LLP & Spens LLP and McGrigors LLP, which opened a new Manchester office in 2008.
While no legal market is immune from the impact of the credit crunch, Edinburgh’s reliance on financial services has seen it suffer more than most. The well-publicised travails of RBS and Bank of Scotland, which collectively employ 15,000 staff in Scotland’s capital and represent key sources of instructions for the country’s legal elite, has been of particular consequence. And with RBS and Bank of Scotland both becoming more London-centric following their respective part-nationalisation and acquisition by Lloyds TSB, concerns remain over the long-term significance of Scotland to each institution.