New global top dog raked in nearly £2 billion last year, which buys a lot of hot dogs; while survey shows magic circle slipping in reputation stakes
“LA’s fine, the sun shines most the time, and the feeling is lay back,” wrote Brooklyn boy Neil Diamond back in 1971.
But the atmosphere at Los Angeles-headquartered Latham & Watkins appears to be anything but relaxed as the firm leaps to the top of the global legal profession revenue rankings.
The 80-year-old practice racked up a 2014 turnover figure of $2.61 billion (£1.68bn), according to a report in Legal Business magazine.
The figure comes in the wake of a 14% boost to revenue in the last year, meaning the firm sails past London’s magic circle competition.
Legal Cheek’s Most List shows that L&W offers 20 training contracts in London annually, putting it behind only White & Case among the pure US firms in the UK capital.
More importantly, Latham offers big wedge to those trainees that it keeps on. Newly-qualified salaries at the firm’s London office are currently pegged at £98,000, only £2,000 behind the triumvirate of Akin Gump, Davis Polk and Sullivan & Cromwell. However, those three recruit far fewer trainees every year.
L&W’s revenue surge translated to the firm’s highest ever profit per equity figure, with top lawyers trousering an average of $2.9m (£1.87m) last year.
The firm shot past the annual revenue figure for Anglo-US giant DLA Piper, which currently sits atop The Lawyer magazine’s UK 200 list with a turnover of £1.56bn.
Trailing DLA are four of the magic circle players: Clifford Chance on nearly £1.36bn, Linklaters at £1.25bn, Allen & Overy on £1.234bn and Freshfields Bruckhaus Deringer on £1.232bn. Slaughter and May is out of the turnover top 10, although it maintains a profit-per-equity-partner figure to die for — top lawyers on average loaded their wheelbarrows with £1.82m each over the last few years.
Relase of Latham & Watkins’s figures coincided with the publication of a survey showing that many top flight lawyers take the view that the magic circle’s reputation and influence continues to be dented in the aftermath of the 2008 global financial crash.
Some 45% of lawyer respondents to a survey by recruitment specialists Laurence Simons said magic circle firms were weakened owing to the retreat of key banking sector clients and a decline in top-tier mergers and acquisitions.
Indeed, survey respondents also espoused the view that US law firms in London were taking a greater slice of the pie. According to the researchers, the combined revenues for the top London-based international law firms (a list dominated by US firms) stood at slightly more than £2.5 billion in 2009. By 2013, that figure had increased to £3.5 billion.
According to the researchers, 44% of respondents said “magic circle influence has been diluted in light of this success. Only 4% believed the influence of the magic circle has increased in light of the competition from the States”.
But that doesn’t mean the magic circle cachet is completely dead. Some 55% of survey respondents said training in top-five firm is as important today as it was 25 years ago.
Importantly, lawyers starting at a magic circle player tend to stay put — according to the survey, 83% of magic circle partners trained at a magic circle firm.