What are The Global 200 Law Firms?
Global 200 law firms are the largest legal establishments in the world. They are ranked not only by revenue, but by the size of revenue among associated offices across the globe (if they are international firms) and by headcount. The term itself is a little misleading though – while there are 100 law firms on the list, there are actually several hundred law offices included in their headcounts. At first glance, this also seems misleading since some of the top law firms don’t seem to have a massive headcount relative to the companies that they are in the same list with.
The full list of Global 200 law firms is updated yearly by the Global Legal Post and Beltway Legal Media to leverage existing data that is collected by major sources and compiled into a new resource. For instance, the starting point for most of the data is the American Lawyer magazine, who produce the highly respected AmLaw 200 list each year. The Global 200 firms are taken directly from the AmLaw 200, but then they are expanded using resources like the National Law Journal, who collects similar data to draw their own annual AmLaw 100 list . Like the AmLaw list, the Global 200 uses both fee income and headcount to create its list. In expanded second, International firms like DLA Piper LL and Baker & McKenzie LP get a double count for revenue and headcount because they have offices in multiple countries.
There are also firms on the AmLaw 200 and Global 200 list that do not appear in the Global 200 list. The reason is that international firms like Kirkland & Ellis, LLP and K&L Gates LLP do not get a double count for revenue or headcount. However, all of the firms on the Global 200 list cannot be found on the AmLaw 200 list. The reason for this is because firms that are purely international, without any U.S.-offices are not a part of the AmLaw list, but they do fall under the criteria of the Global 200 law firms. In addition to Global 200 law firms, there are also several law firms that didn’t make it to the Top 100 list, but they do have a notable distinction to be included in the Global 200 list. Not surprisingly, some of the most common distinctions that make a Global 200 law firm include top-level talent, large capital, or number of clients.
The Law Firms Making Up The Global 200
The Global 200 list is not just a reflection of volume but also of specialization, influence and the complexity of the work a law firm undertakes. This relates to the clients they are working with, the industries they are participating in and the types of practice.
One example of a prominent firm that appears on the Global 200 list every year is Baker McKenzie. Baker McKenzie is a multinational law firm headquartered in Chicago that has strong international presence. It routinely appears at or near the top of the Global 200 list.
Baker McKenzie is a global corporate law firm that draws together the practices of their lawyers across the world. The firm advises local businesses, national governments and multinational corporations on a variety of legal and tax issues.
Specializing in global corporate operating and compliance issues. They have an international reach with operations in 47 countries. Globally they have 4,600 attorneys in 78 locations. In North America they have 1,300 attorneys in 13 locations.
Their attorney count has been relatively flat year over year. Their 2018 revenue was reported at $2.80 Billion. Their profit per equity partner was reported at $1.4M. Baker McKenzie’s studies show they have 93% law school placement rate and that 20% of their partners are female.
Freshfields Bruckhaus Deringer is another global firm that regularly appears on the Global 200 list. The firm is headquartered in London and has a strong global presence. Their reputation has been built on their work in litigation and their strong relationships with investment banks.
They have a global reach with operations in 28 countries. They are located in 38 locations worldwide. They have 2,500 attorneys globally.
With that attorney base they write approximately 350,000 hours of time and earn approximately $3.6 Billion USD in revenue. They do have a strong profit margin with reported profits per partner at $1.5M. Freshfields Bruckhaus Deringer does have a high diversity rate at 32%. They have a women to men partner ratio of 24% to 76%.
Clifford Chance is another global firm in the Global 200. Their reputation stems from their strong banking and finance practice. Their clients are primarily Fortune 500 heavyweights.
Clifford Chance is based out of London and their client base around the United States is mostly located in New York. They have a global reach of 22 countries and are located in 36 locations. They have 3,700 attorneys.
They have revenue coming out of their New York office of approximately $900 Million USD. Their 2018 year revenues were $2.4 Billion USD with profits per equity partner reported at $1.6M.
Clifford Chance has a relatively high diversity rate with 31% of their partners being women. They have their lowest rate of women to men ratio on the Global 200, at 21% women to 80% men.
Dentons is a rapidly growing firm that was formed by Dentons having merged with multiple large firms worldwide. They have expanded their presence to include 75 countries. They are becoming more and more of a competitor in both the US and European markets.
Dentons is headquartered in Washington DC. They have a global reach of 75 countries and are located in 157 locations. They have 8,000 attorneys worldwide.
Their 2018 revenue was $2.8 Billion USD with profits per equity partner at $1.04M. They are a diverse firm with 37% of their partners are women. They also have a low ratio of men to women with 39% women and 61% men.
Morgan Lewis is a major player in the American legal market. They have a strong reputation as one of the top labor and employment law firms in the country. They have recently expanded and moved their headquarters from Philadelphia to New York.
Morgan Lewis has a global reach of 14 countries and 31 locations. They have 2,200 attorneys.
They write approximately 2.2 Million hours per year and billing out approximately $3.5 Billion USD in revenue. Their 2018 profits per equity partner were reported at $1.5M.
The Trends Affecting The Global 200 Law Firms
The Global 200 firms are striving to find ways to stand out among their peers through innovation, quality, and personalization. While the average revenue of the Global 200 continues to grow, pricing pressures in the legal industry remain. The G200 continues to capitalize on its strengths by focusing on operational efficiency to control overhead expenses, particularly real estate, technology, and people.
Innovation
The percentage of law firms’ revenues coming from innovative service offerings increased this year, with 18 percent of respondents’ revenues (up from 15 of 2017) coming from offering new services that are not traditionally offered by law firms.
Pricing
The Global 200 continues to see margin erosion as a result of soft demand and price pressures, particularly for the top firms. Competition from non-traditional service providers and in-house departments remain. The Global 200 is driving growth through mergers, with many having made a merger in the past five years. The Global 200 firms continue to expand strategically to cover key markets in geographies and practice areas.
Technology
Nearly two-thirds of Global 200 firms expect technology to drive 11 percent or more of their revenue within five years. Tax and employment firms are most likely to expect their top-line revenues to be driven by technology revenue. Just over one-tenth of the Global 200 made digital investments of more than $5 million in the past year. Across all digital investments, the average firm allocated the largest percentage of its budgets toward client-facing technology solutions (30 percent), cloud services (14 percent), artificial intelligence (14 percent), and analytics (14 percent).
Thinking Outside The US: A Comparison Of The Global 200 Law Firms
North America, Europe, and Asia dominate the Global 200 law firms list. Together these three regions account for 83% of the largest law firms in the world.
North America is the most dominant region in the Global 200 law firms with 153 of the largest law firms calling the United States and Canada home. The 153 North American law firms average 668 lawyers each and range from Baker Hostetler with 1,007 lawyers to Knobbe Martens Olson & Bear with 129 attorneys. These firms generate on average an astounding $1,041,200,000 in gross revenue.
Europe has the second largest grouping of firms with a total of 25. These firms, which comprise 12.5% of the Global 200 rank highly using other metrics. The average firm among these 25 firms employs 730 attorneys and generates gross revenue of $661,280,000.
Asian firms arrived second generation to the Global 200 list since 2004. In this year’s list Asian firms had improved their ranking on average from 58 to 49. The number of Asian firms on the Global 200 list increased from 4 to 12. Asian firms average 118 lawyers and $59,891,000 in gross revenue. The largest Asian firm on the Global 200 list is Tokyo-based Nishimura Asahi with 525 lawyers and $608,000,000 in gross revenue. The law firm Baker & McKenzie, which has the largest number of lawyers of any law firm in the world also has offices in Hong Kong, Shanghai, and Beijing. Baker & McKenzie has the ninth highest gross revenue in the world among law firms at $2,660,000,000.
The remaining 10.5% of the Global 200 law firms are from the Middle East, Latin America, and Africa. These firms average 227 lawyers and $69,509,000 in gross revenue. The largest firm, Afridi & Angell, operates out of Dubai and boasts 174 lawyers with 16 partners.
The Impact Of M&A
Mergers and acquisitions (M&A) have long been a strategic driver of firm growth for most of the Global 200 law firms, with more than two-thirds having undergone no fewer than one M&A since 2000. But it appears that not all M&As have the same impact upon a firm’s global legal ranking. An analysis of the Law Firm Brand Index over the last three years reveals that M&A can – in the short term at least – deliver marginal benefit to a firm’s brand ranking; however, the M&A must involve firms that are already among the most elite of the Global 200. A for-commanding example is that of London-based Allen & Overy (A&O). The firm merged with New York-based Brobeck Phleger & Harrison LLP in 2009 and despite the combination, A&O did not improve upon its top ten position within the LFBI rankings, remaining at number six as it had in 2008. However, most "mega-mergers" have had a far more positive impact on firms’ brand rankings. US-based DLA Piper is perhaps the most obvious of examples in this regard. After merging with nine other firms during the course of 2005 and 2006, the firm surged from number 14 in 2004 to number two by 2006. It has continued to leverage smart combinations that are being well received by the market , landing at number five in the most recent rankings. To be sure, this is no coincidence. It would seem that the brand does indeed benefit from an increase in overall headcount and market diversification afforded by the M&A process. The data suggest the flip side of the coin also holds true: namely that the absence of M&A by a firm becomes a significant disadvantage over time in positions the Global 200 ranking. New York-based Paul Weiss Rifkind Wharton & Garrison LLP hit a 12-month low of 25thmost legal brand during 2005. The firm responded in 2006 with the introduction of three new Asia offices and departures from Dewey Ballantine and Kaye Scholer. These strategic moves facilitated the firm’s recovery, allowing it to climb from its 2005 low to 24th by July 2008. In 2009, the firm continued to develop and nurture its Asian and European practices, driving it to a current brand index position of 10th. Finally, it should be noted that the management of M&A integration takes considerable time and effort from a firm’s leaders. Without proper planning to manage the human capital issues that are inherent with the combination of firms, it is only a matter of time before the human capital processes naturally revert back to the mean.
The Challenges Facing The Global 200 Law Firms
Many of the Global 200 law firms were founded in the early 20th Century or before and have experience innovating to remain competitive. Yet, a number of trends threaten their ability to do business as usual. As they continue to expand internationally, new competition is emerging. The international contingent refers to larger, global firms (Accountancy, consulting) which are entering the legal services market with a new position on how services should be delivered. A global firm that has expanded offerings to advisory, banking, taxes and other legal services is able to provide clients with attractive added value. Global 200 members face increasing competition from firms with a more finely-tuned regional focus and a better understanding of the emerging markets and growth sectors in these areas. In order to succeed in this new global environment, law firms must know how to attract, retain and develop the best talent. In fact, market competition for high quality talent is reaching unprecedented levels. This is one of the most important challenges for law firms today. The most important factor to consider is that, while international competition is intensifying, there are also opportunities. For example, most advanced industrialised countries are experiencing low growth. In contrast, many developing markets are growing rapidly. This offers opportunities for those firms with the resources to offer a global service. Law firms have also to deal with substantial and novel regulatory changes. Firms will need to find the best way to incorporate external advice and knowledge in order to serve an increasingly global clientele. Finally, if they are to compete effectively in the new global legal market and satisfy clients with complex legal needs, law firms will need to emerge from their traditional structures which are mainly focused on practices to a client-centric structure. This will require significant change in order to create agile teams and change management processes to facilitate a quick and effective response. Traditional conflict checks can very often get in the way of this particular challenge and require that firms take a fresh look at how to improve their procedures.
The Future Of The Global 200 Law Firms
As legal professionals and commentators consider the future of Global 200 Law Firms, predictions and analyses of global trends point toward continued dominance for these top-tier firms. Many experts believe that Global 200 Law Firms will continue to perform better and better for the near future. Strong international networks and a stable of prominent partners will help these law firms weather the current global economic uncertainty. With a diversified portfolio of practice areas and income-generation opportunities, the Global 200 remain well-positioned to tackle and succeed in the emerging global economy. Mergers, acquisitions and the emergence of smaller markets will be key over the next decade. Experts have suggested that the changing global landscape might lead to the creation of seven mega-firms , steering the direction of the industry in the coming decades. With emergent economies in India and elsewhere on the rise, mergers may well be the way of the future for older law firms looking to capitalize on change. Predictably, outsourcing will not slow down anytime soon. While new technology may make outsourcing less critical in the future, many firms will likely take a wait-and-see approach before cutting off their connections with off-shore talent. Much remains to be seen over the next ten years, considering the recent turmoil in the financial world. Only time will tell just how huge the legal scene will be by the time a decade has passed.