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Home > 2008 > May

May 2008

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May 24,2008
Graduate Market

• How does the graduate market for the legal sector compare to other industries?
• Well, firstly you won't be lonely since law hires a large portion of all graduates (7%).
• Hiring rates are very stable because law firms hire three years in advance of qualification.
  • They have to play safe unless they are willing to make a bet on the economy three years down the line.
  • Unlike banks which grow and shrink their workforce in line with market conditions.
• Salaries:
  • Secondly, you will be awarded one of the highest starting salaries for anyone your age.
  • On top of which, salaries for junior associates are being pushed up by the American firms in the UK.
• Given the desirability of a law career, whilst there are many applicants per place, the figure is not astronomical. This is probably explained by a degree of self-selection amongst applicants who know what is required to make the grade.
• This is perhaps unlike Fast Moving Consumer Goods (FMCG) companies (who make things like shampoos and toothpaste) which attract over 100 applicants per place. An applicant to a law firm is less likely to have speculatively written a cover letter and CV after seeing the brand name of a shampoo in the shower.

Sources include: AGR Summer Survey, Company Websites, The Lawyer, Legal Week, Topemployers, Legal 500, Hildebrandt, ALM Research, Legal Business, First Research, Legal Marketing News and The Economist.

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May 23,2008
Recent History and the Future

• The top 20 law firms in the UK have remained largely unchanged.
• Reluctant consolidation among smaller firms.
• Legal industry recovering after 3 years of tough conditions.
  • Firms have pruned partners to preserve PEP.
  • But have emerged leaner and in better shape for the future.
  • Legal services will be liberalized by the LLP model.
  • A new phase of growth is anticipated.

• The UK's largest firms have followed a path of international expansion.
  • This has led to an increase in size and revenue but a decrease in profit margin.
  • However, many lessons have been learnt about international strategy and many may continue to aggressively pursue the U.S. market.

What have been the trends in 2007 for each practice area?

Corporate

• M&A market remains buoyant with many large deals.
• However, focus has moved away from highly leveraged (debt funded) buyouts by private equity buyers to corporate-on-corporate deals.

Finance

• Continuing credit crisis and tightening of credit leading to:
• Recent crash in leveraged buy out (LBO) deals.
• An increase in restructuring mandates due to more companies facing financial difficulties because of the drying up of credit.

Real Estate

• Very strong year.
• Profitability is now competing with that of Corporate due to:
  • Increased investment in real estate.
  • Growing complexity of transactions.
  • Blossoming regeneration.
• REITs providing a new source of work.
• Worries about raising interest rates.

Litigation

• A few big cases, but long term trend towards mediation ADR to avoid costly litigation.
• However, fresh hopes ... Read the full article

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May 22,2008
Top UK Firms' Practice Sectors

• Companies are often best described by the products they sell and law firms are no exception.
• If you want to work in a specific practice area, or want to get an objective flavor of how a firm is positioned, it pays to see where their business comes from.

• Evidently the large firms can handle work in all service areas and have specialist partners in each of the four main practice areas of Corporate, Finance, Real Estate and Litigation.
• Most of the firms pride themselves on having large and profitable Corporate divisions. There are various proportions of Finance and Litigation however there tends to be relatively little exposure to Real Estate work (although this is now increasing).
• The "Other" category consists mostly of Tax, Competition, EU, Incentives, Employment and Projects.

Benefits From Large / Small Divisions

Large

• Brand status (useful for the CV).
• Excellent in-house education.
• Higher pay (e.g. Law School fees).
• More international secondments.
• Experience on deals that only large departments can handle.

Small

• Broader job description.
• More meaningful ties with colleagues.
• More responsibility.
• Big fish - small pond.
• May be more profitable.

• Whatever you decide, talking knowledgeably about the firm is bound to leave a good impression at the training contract interview.

These charts show the proportional increase in each firm's revenue and PEP by assuming that they were all equally sized in 2001:

... Read the full article

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May 21,2008
The UK Market

• The UK legal market is carved up into firms that can be grouped into four broad categories: The Magic Circle, The Silver Circle, International Firms and UK National Firms.
• Whilst revenue volume, strategy and client base define a firm's position in the market, employees should also be interested in PEP. However, PEP can overestimate margins and remuneration for fir ms with a high number of non-equity partners.
• In support of Robert Joffe's point regarding diseconomies of scale, there is little correlation between the size of firm and its profitability. The exception to this is the Magic Circle, who proudly maintains both.

Magic Circle (Pink)

• Historically dominated the top end of the City Mergers & Acquisitions market.
• No sign that they are losing this position and several are strengthening their grip.

"Silver" Circle (Grey)

• Generally advise premium UK clients rather than global institutions.
• Work tends to be real estate, AIM business, private equity and litigation.
• Dislike for bureaucracy and over management.
• Strong recent performance and have adapted well to the recent downturn.

International Firms (Purple)

• Internationally focused City firms whose larger members are known as the "Chasing Pack".
• Slower to react to the downturn than their mid-tier rivals due to their larger size - producing ... Read the full article