Like the rest of the U.K. elite, Freshfields missed the window to secure a merger with a top U.S. counterpart prior to the financial crisis when the pound was strong and most U.S. firms had not gained credible market share across the U.K. and Europe.
Then the opportunity was mostly gone. Freshfields is no longer one of the world’s largest and richest law firms—it ranks 17th by revenue and 44th by average profits per equity partner. In the U.K., it is not all that much larger than U.S.-headquartered firms Kirkland & Ellis and Latham & Watkins.
And with Allen & Overy’s merger with Shearman & Sterling now approved by partners, the pressure is on the likes of Freshfields, Linklaters and Clifford Chance to play catch up if they want to try to compete globally by operating a sizeable presence in the world’s largest legal market—the U.S.
Freshfields is definitely trying to compete on this front. On the back of aggressive hiring and new office openings, its U.S. revenue grew 29% in the financial year before last and the firm is performing well in the M&A legal adviser rankings.
But it is wrong to assume that this is simply a battle involving lateral partner hires and deal mandates. In many ways the battle is actually an internal one. Clifford Chance’s ill-fated merger with U.S. firm Rogers & Wells in 2001 was an example of the damage internal discord can wreak.
Freshfields’ heavy and rapid investment in the U.S. in recent years has now left it with what appears to be a similar challenge.
As Charlotte Johnstone’s excellent feature last week showed, a handful of American partners are now “calling the shots” at the firm, marking a momentous power shift to the U.S. away from its traditional power bases in the U.K. and Germany...
