There’s no Biglaw intercity rivalry which can match that of London’s venerable Magic Circle and New York’s elite white shoe firms. Both groups of firms are the clear alpha dogs in their markets, attracting the top talent and most lucrative clients. However, there are some significant differences between the two groups in how they operate. For example, U.K. firms tend to follow a lockstep (rather than “eat what you kill”) compensation model. Last month, friend of ATL Bruce MacEwen took a deep dive into the question of the relative performance over the last several years between the Magic Circle and their New York cousins. The piece is highly recommended: it’s chock-full of data and its findings suggest the groups are moving in different directions.
Using publicly reported data for the years 2008—2013, Bruce focused on such metrics as headcount, percentage of equity partners, PPP, RPL, and profit margin. The Magic Circle firms—Allen & Overy, Clifford Chance, Freshfields, and Linklaters—are of course a well-defined group (Slaughter and May, the only member firm without a New York office, was excluded). For New York, these firms were selected as the comparison group on the basis of “historical roots, geographic footprints, and business models”:
One could query the absence of Cravath, Wachtell, Skadden, etc., and we refer you to Bruce’s piece for a fuller articulation of these choices. The U.S. market for the highest end legal services is much more fragmented and diffuse than its U.K. counterpart, and which precise group of firms is the closest equivalent to the Magic Circle is endlessly debatable. But for the purposes of this comparison this group will certainly serve.
So when we look at numbers, what do we find?