US law firms making inroads in London

Revenue at US firms in London is growing seven times faster than at their magic circle rivals, a report seen by the newspaper has revealed.

The threat from the US is being led by Kirkland & Ellis and Latham & Watkins. The firms, which are headquartered in Chicago and Los Angeles respectively, have, for the first time, made it into the top 15 of the earnings table based on London revenue.

Analysts said domestic firms have gotten rid of the lockstep model for equity partner pay “in all but name”. That model remunerated partners on a time-served basis. American law firms, however, use performance as the metric for pay.

Revenue at Kirkland & Ellis’ City office rose to £416.4 million over the past year, an increase of almost 175 per cent.

Latham & Watkins earned £405.5m last year at its City office, almost doubling the previous year’s figure.

Tony Williams, a former managing partner at Clifford Chance, and founder of the consultancy, Jomati, said the figures showed that “it is clear that a relatively small group of US firms are now established and extremely credible players”.

He said US firms were focused on “higher end work and higher billing clients”. He added that the Americans “have effectively caused many of the magic circle firms to abandon lockstep in all but name, which is a potent indication of the disruptive impact that they have had”.