Which Law Firms Will Prosper After the ‘Hundred-Year Flood’?
Indiana University law professor William Henderson calls the economic downturn that hit the legal profession a “hundred-year flood.”
Not every law firm will survive, and not all will prosper, he says. Law firms such as the dissolved Howrey, once one of the world’s 100 largest law firms by revenue, have already seen the impact.
What lies ahead and which law firms will continue to prosper? The Economist offers these predictions:
• Elite New York law firms that cover a wide spectrum of legal work will thrive. They include Davis Polk & Wardwell; Sullivan & Cromwell; Cleary Gottlieb Steen & Hamilton; and Simpson Thacher & Bartlett. These firms “don’t try to be everywhere,” the Economist says. “Nor do they try to do everything, but offer the range of services on which their New York businesses were built: M&A, finance, white-collar defense and so forth.”
• Also likely to do well are well-regarded and “tightly focused firms that concentrate on only a few fields.” They include Wachtell Lipton; Cravath, Swaine & Moore; and Slaughter and May.
• Another approach, taken by a third class of law firms, is to expand globally and offer anything, anywhere. “These are big and well-known, but do not have the glittering reputations of the first two groups,” the Economist says. Firms pursuing expansion include Jones Day, DLA Piper, and Baker & McKenzie. The article says expansion has pitfalls for more integrated firms with a global spread such as Allen & Overy and Clifford Chance, which had to cut lawyers and cut equity shares during the recession.
“Some pin Howrey’s demise on its rush to spend on foreign offices while betting heavily on antitrust law just as M&A was falling off a cliff,” the article says. “There is money in globalizing, but not enough for everyone.”
