September 17, 2009 6:30 PM

Could The Am Law 100 Become The Global 10?

Posted by Brian Baxter

The Am Law 100 could soon find itself split into segments as the global economic crisis widens the gap between top-grossing international firms and others struggling to keep up, says a leading U.K. law firm consultant. (Hat Tip: Law Society Gazette.)

The prediction came courtesy of Alan Hodgart, a consultant with London-based business advisory firm H4 Partners and author of Strategies for Law Firm Mergers and Acquisitions. Hodgart believes a "global elite" of firms culled from the ranks of the Magic Circle and the cream of the U.S. crop will soon cement themselves as the legal industry's top tier followed by a group of 30 "business law" firms.

According to Hodgart, Magic Circle firms Linklaters, Freshfields Bruckhaus Deringer, Allen & Overy, and Slaughter and May have secured their place in an emerging clique of international firms that will dominate the biggest deals and pay the most in profits per partner. 

Hodgart, who based his predictions on data collected by H4's research unit, says that U.S. firms Cravath, Swaine & Moore, Davis Polk & Wardwell, Simpson Thacher & Bartlett, Sullivan & Cromwell, and Wachtell, Lipton, Rosen & Katz would comprise the rest of the elite global firms.

But that's hardly breaking news. Top U.K. firms have posted annual financials comparable to their U.S. brethren and spent much of the past decade building international networks to hedge their bets after boom times. And while average profits per partner and revenue per lawyer fell last year among The Am Law 100 for the first time since 1991, there was still little change in U.S. law firm rankings.

If Hodgart's predictions hold true (he did tell The American Lawyer in 2003 that he foresaw clients getting tougher on pricing), it will be interesting to see what firms fill out the second tier of 30 "business law" firms.

Hodgart cited DLA Piper as as emerging business firm, but wasn't willing to make a determination on Clifford Chance's place in his new paradigm until the firm completes its restructuring. Other firms like Cleary Gottlieb Steen & Hamilton, Skadden, Arps, Slate, Meagher & Flom, and Shearman & Sterling are also in the business law category, but have the potential to crack the top tier.

"The 'pseudo-strong' ride the boom on the way up, when the work is rolling for everyone," the LSG reports Hodgart saying at a managing partners summit earlier this year. "But from now on, we discover who is strong in reality."

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