The American Edge and What the UK Can Do
In recent years, US law firms have made a big impact on the UK legal industry. There is no denying the ‘punching power’ of firms like Skadden, Kirkland & Ellis, and Latham & Watkins. These firms have built wide-ranging international networks and advise some of the most profitable transactions and well-known clients by utilising their financial stability and aggressive growth methods. This, backgrounded by the competition for top talent, has led to a city ‘pay war’ with US firms winning the battle on numbers alone. With US shops paying up to £180,000 per annum. Where does this leave the Magic Circle firms and how can they stay relevant in the face of these US powerhouses' prestige and appeal?
It would be wrong to dispute the success of many UK firms, particularly the Magic Circle. A key feature of leading UK firms is their integration of European expertise into their global service offerings, especially in EU anti-trust following the rise in the EU’s scrutiny of tech giants. Freshfields, for instance, represented Facebook following an €800 million anti-trust fine. Similarly, Clifford Chance has built a large reputation in the European banking sector, exampled by their advise to BNP Paribas on the establishment of Triodos Bank’s €2,500,000,000 Debt Issuance Programme. Post-Brexit, Magic Circle firms have doubled down on their commitment to mainland Europe, with many firms opening offices in key cities like Frankfurt, Paris, and Brussels. Displaying strategic investment and dedication to their EU clients sets them apart from their US counterparts.
While US firms often compete on scale, UK firms have developed competitive advantages through specialisation. A&O Shearman, for instance, is renowned for its dominance in project finance, securing landmark deals such as advising on the $20 billion Mozambique liquefied natural gas (LNG) project – the largest private sector investment in Africa. Additionally, UK firms lead in sustainable finance and ESG (Environmental, Social, and Governance) legal services, aligning with global shifts towards sustainability. Something US firms, for cultural reasons mainly, have fallen short on. Linklaters, for example, has become a leader in advising on green bonds and sustainability-linked loans. Their role in structuring Europe’s first sovereign green bond for the German government underscores their ability to innovate in fast-evolving ESG-focused financial markets.
US firms often employ an ‘eat-what-you-kill’ remuneration model that promotes individualism and fosters a competitive work environment. This is also intensified by the small teams of lawyers who find themselves in US firms. Trainees find themselves with more interesting work early on but bear the brunt of the stress and worry when things go wrong. In contrast, UK firms generally adopt a ‘lockstep’ model, which promotes collaboration and long-term client relationships, this is also helped by the large trainee intake where classes have a sense of camaraderie.
Securing high-profile deals remains central to the reputation and growth of any law firm. UK firms continue to lead or co-lead some of the world’s most complex transactions and disputes. For example, AstraZeneca recently received advice from Freshfields on its $39 billion acquisition of Alexion Pharmaceuticals, a cross-border transaction that necessitated knowledge of corporate, antitrust, and regulatory law in multiple jurisdictions. UK firms use their extensive bench strength in arbitration and litigation in the dispute resolution space. For instance, Herbert Smith Freehills has established a reputation as a world leader in international arbitration. Their representation of BP in a multibillion-dollar dispute following the Deepwater Horizon disaster showcases their capability to manage high-stakes cases with global implications. In the UK market, experience and relationships matter, and clients are not blindsided by the allure of US law firms.
Retaining top talent is crucial in an industry defined by expertise. While US firms often lure lawyers with lucrative pay packages, UK firms emphasise work-life balance, professional development, and cultural fit. This holistic approach to talent management not only attracts but also retains lawyers who value stability and a collaborative environment over short-term financial incentives. Many UK firms opt for a person-centred and contextualised recruitment process, making sure they have the best talent from a range of backgrounds. An emphasis that is notably lacking at many top US firms. This sets UK firms apart as employer-diverse employees feel comfortable working.
Even as US powerhouses become more prevalent in the market, UK firms continue to do well. Firms stay relevant and competitive by utilising their advantages in European markets, focussing on important practice areas, and investing in personnel and innovation. UK firms offer a collaborative, client-centred style that appeals to many international and regional clients, while US firms deliver financial strength and ambitious growth initiatives. UK companies are demonstrating that there are multiple strategies for dominating the legal industry.
By Eniola Adekunle
