‘Mega’ Law Firms
Until the 1960s, the largest law firms in England and Wales could, by law, have no more than 20 partners. Since that restriction was removed, the growth of the large law firm has been staggering.
In 1999, the trade publication The Lawyer began ranking English firms into a top 100 in terms of turnover and size. That year, the law firm Clifford Chance was ranked first, with 332 partners and 1,980 associate (non-partner, employee) lawyers. A mere 16 years later, in 2015, the top-ranked law firm was DLA Piper, which has over 1,300 partners, and over 4,000 associate lawyers operating from more than 90 offices in over 30 different countries.
In 2013, the combined annual turnover of just the top ten of the top 100 English and Welsh law firms was over £10 billion. This was more than a third of the turnover of the entire legal services sector in England and Wales for the same year. These large law firms are powerful economic actors in their own right, and advise the world’s largest companies. Their reach, and their importance, cannot be overstated.
Existing scholarship tells us that there are a number of drivers for changes in the practices of corporate law firms over time:
- the globalisation of legal services (law firms opening offices in new countries; and law firms in different countries merging together) has seen increased competition for work;
- the rise of the in-house legal function (which we covered in Week 1) has allowed clients to better understand which legal services they need and how much those services are worth
- legal practice has become larger and more diverse as women and minority lawyers have sought entry and progression (women now make up more than half of all practising solicitors in England and Wales, but only around 20% of partners in large law firms are women);
- large corporate clients and large law firms have started to outsource and unbundle some of their work as part of a drive towards efficiency (i.e. a piece of work is done by company X and a different piece by company Y in an attempt to drive down cost);
- new entrants (different types and models of law firm, such as Alternative Business Structures that we looked at in Week 1) and technological innovation have shaped the practice of law; and,
- the financial crisis has had a significant knock-on effect on how much clients have available, or are willing, to spend on external legal counsel (what has come to be known the ‘more for less’ agenda).
These changes to corporate legal practice, and drivers of change, provide important context for the research Steven has conducted which we will explore this week.
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