Marketplace Update: Autumn 2024

With the market continuing to strengthen as the year progresses, the financial results of firms make interesting reading:

The market is diverging. The global law firms have the firepower and means to make sure that they take market share and are pulling away in profitability from the rest of the field. The Magic Circle continue to play catch up with the merged A&O Shearman choosing a different approach to their US strategy than Freshfields and Clifford Chance. With profitability increasing for the US headquartered firms, their ability to lure partners is only growing and London continues to be of key importance to these firms. Focusing London office efforts on core sectors or key capabilities of the firm to enable them to make the most market penetration is paying dividends.

There’s also been some tweaking with firms’ international strategy and with profitability as the dominant aim, we’re seeing firms pulling out of certain international markets and closing offices, to concentrate on the most profitable jurisdictions and areas of growth, rather than simply wanting global coverage.

For the non-US firms, the largest UK national firms have been focusing their strategy on building internationally whilst trying to maintain market share domestically, with a dual strategy being reflected in more muted profits and opening up the market for smaller firms to step into their shoes. A more focused approach is paying off for firms with a more singular strategy.

2024 has not been ‘more of the same’ as the sluggish 2023. Firms have mainly done well and the outlook remains cautiously optimistic as transactional activity is starting to pick up, litigation teams (and demand) is busy and the appetite of firms to grow remains unabated. The forthcoming budget is expected to keep tax and employment lawyers working hard and continued developments with technology and regulated areas give ever-resourceful law firms a way to continue to do well.