Shape of the Magic Circle is changing
The Magic Circle is less of a magic circle and more of a 'magic tangle of extended friends, relatives and merged-in firms', according to analysis by The Lawyer.
Every year the publication ranks the UK's top 200 firms, and, spoiler alert, this year is no different: the definitive list was published this week. And, as per, the top five spots are dominated by the so-called Magic Circle firms: Clifford Chance, Linklaters, Allen & Overy and Freshfields are all in the top five, while Slaughter & May round out the top ten.
But what is notable is that mergers and takeovers have tweaked the revenue and turnover streams for a number of top firms, which is having an impact on the top 200 rankings. "The biggest risers in the chart are the products of mergers," said The Lawyer's Catrin Griffiths and James Swift, in eerie unison. "There's no doubt that mergers have been the main contributors to the 18.4 per cent increase grossed by the top 100 UK-heritage firms."
So who has been getting their merge on? Norton Rose has been getting their merge on: the firm has a group revenue of £822.3 million in 2011/12, up on the estimated UK LLP turnover of £355 million, as a result of deals in Canada, South Africa and Australia. Similarly, the CMS group has a combined turnover of £692 million; while British arm Cameron 'we put the CM in CMS!' McKenna has seen just £227.6 million flow through an Excel spreadsheet marked 'Cameron_McKenna_Turnover_2011_12.xls'.
Hogan Lovells (£1 billion), Herbert smith (£861 million), Ashurst (£590 million give or take a few million) and others have also seen a significant turnover impact as the result of recent mergers. But mergers don't just have an impact on turnovers: they could decide where companies choose their legal recruitment firm.
And as Ashurst senior partner Charlie Geffen notes, in the future, UK firms will have to know their to-may-toes from their to-mah-toes if they are going to stay in the game. "We believe that eventually the top-tier global law firms will have to be equally strong in UK and New York law, and that is unlikely to be achieved without a merger," he said, eating a bagel and shouting at pedestrians. "No doubt there will also be a small number of firms that are exclusively New York or English law, but outside of that group firms will have to be capable of both."
Does that mean that eventually The Lawyer's top 200 will slowly be whittled down as firms merge ever into one another, dwindling through the top 100, barely stringing together a top 50, eventually just a list of the one and only super-firm in the world? No, probably not.