Judge John Hack says the California surfer dudes at global firm Latham & Watkins may be riding high in revenue and profit, but London’s top five will remain magic with students for some time to come
Here’s an introduction to an article in the Law Gazette:
“Is the ‘magic circle’ of leading law firms a mythical phrase conjured by journalists or does it actually carry weight among lawyers?”
And here’s the top end of a feature story in the law section of The Times newspaper:
“Reports of the magic circle’s death have been greatly exaggerated — at least according to those hovering around that elite group of City law firms.”
Those two similarly themed articles are separated by more than a decade.
But legal affairs commentators have been banging on about London’s magic circle for far more than just the last 11 years. And on Wednesday Legal Cheek unashamedly jumped on the bandwagon with a report that yet another firm had surpassed the so-called top five in revenue, and that the reputation and brand of the magic circle players was taking a bit of a beating in the fallout of the global financial crisis.
So has the magic worn off for Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May? Can we finally utter the words that countless legal hacks have been gagging to say for years: the magic circle is dead?
That’s not to take anything away from the achievement of Los Angeles-based global firm Latham & Watkins, which has just soared past the magic circle — and Anglo-US rival DLA Piper — to take top place on the annual revenue table. L&W’s recently released yearly earnings figure of £1.68 billion has put the others in the shade.
DLA’s turnover figure stands on £1.56bn, followed by Clifford Chance on nearly £1.36bn, Linklaters at £1.25bn, A&O on £1.234bn and Freshfields on £1.232bn. Meanwhile, old-school-tie brigade Slaughters — which still refuses to disclose financial details — is thought to fall outside the revenue top 10.
The Californians also managed to convert surging revenue into profit. On average, equity partners at the firm last year trousered £1.87m.
That, too, well outpaces the magic circle competition — for the most part. Of the four that report, Freshfields comes the closest on £1.48m, followed by Linklaters on £1.39m, CC on £1.14m and A&O on £1.12m.
Slaughters is still thought to thought to eclipse the lot, with its partners instructing their chauffeurs to load the boots of tinted-windowed Bentleys with an average of up to £1.97m annually.
But for once at the top end of the legal profession, the debate is not all about the money.
The reputations of the magic five may be slightly tarnished in the wake of the crisis — as a result of having such a heavy book of banking clients — but law students with an eye on the City should ask themselves this: If all my dreams came true and I had training contract offers from any one of the magic circle firms and Latham & Watkins, which would I accept?
The Judge — who is a betting man (isn’t everyone on the bench?) — wagers a penny to a pound that the answer would be: Well, hellooooo magic circle.
As Anthony May, of leading London-based legal sector headhunting consultancy Hedley May, explained to The Times last November:
“What magic circle firms bring is a consistency of quality and the ability to organise large complex transactions and multi-jurisdictional litigation. There are quite a lot of other firms that are very big, but 75 to 90 per cent of what they do does not compete with the magic circle.”
Chris Cayley, a director at legal profession recruitment agency Laurence Simons, which has just released a survey of attitudes about the top end of the City law firm sector, supports that view.
“The Magic Circle continues to command great respect in the legal world with the majority viewing a training contract at these firms as the outstanding start to a legal career it has always been,” he comments. “The vast majority of the lawyers who are now partners in the Magic Circle started their careers there …These firms clearly value their own rigorous training and career development.”
Yankee law firms in London are certainly not a fad, but the superior cachet of training and being kept on by a magic circle player has some legs in it yet.
Latham & Watkins trounces magic circle with record-breaking earnings [Legal Cheek]