Why These Global 100 Numbers Should Scare The Bejeezus Out Of You

What do Dentons and Applebee's have in common?

This year’s Global 100 provided a lot of lukewarm news. Firms aren’t really growing, with overall revenue limping ahead below the rate of inflation. That’s not really a groundbreaking revelation — we’ve known that growth is dead for years (affiliate link). We also already knew that slowing demand and client cost-cutting are doing a number on law firms in the United States. That the global climate isn’t much different is no surprise. Especially when you consider that firms based in the United States dominate the upper echelon of the Global 100,

What should worry everyone about these numbers is what’s just below the surface. Just like the U.S. market, these overall flat or declining stats obscure a rising gap between an elite cadre of firms and the rest of the pack. The Global 100 survey headlines focus on profits per equity partner declining for the first time ever for the list as a whole, but Cravath’s PPP jumped 18 percent! Kirkland’s grew 14 percent! The top firms had similarly positive revenue news as well. When viewed in this context, the fact that the top 100 firms in the world saw PPP decline and revenue sputter despite these gains highlights a growing gap between Biglaw haves and have-nots.

This isn’t sustainable. Firms lower on that list will get eaten by their larger brethren or just break apart under their own weight. We’re witnessing the Applebee-ification of the law. That seems a more apt term than drawing a McDonald’s analogy. After all, it’s not like these firms are offering substandard product, just… a chain product. As markets become increasingly global, firms want to see a familiar brand wherever they go. They’ll continue to eschew local experts until those locals find themselves under the Dentons umbrella — a casual, legal advice franchise.

Unfortunately, legal advice isn’t necessarily the service best suited to extreme consolidation. If the vectors of global legal advice continue to converge, only a handful of entities will drive how the law is interpreted around the world. And while the risk of this consolidation should scare the bulk of the Global 100 today, it should terrify the elite firms soon enough. The allure of “one-stop shopping” may drive revenues today, but it’s only a matter of time before PwC muscles its way into the business and clients start realizing that merging their accountants with their legal counsel is even more convenient.

Maybe this won’t come to pass. Maybe this is just a stage, a growing pain before a revolutionary shift in the delivery of legal services throws the whole order asunder. We know that technological innovation has opened doors for smaller firms to compete for business in the United States. Could these efficiencies spread across the globe and reinvigorate the rest of the Global 100?

Perhaps. Somehow it feels like the siren call of the familiar will win out though.

For Global Law Firms, Is This as Good as It Gets? [American Lawyer]

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Earlier: The Global 100: Fractured Futures At The Richest Law Firms In The World (2017)


HeadshotJoe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.

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