US versus UK Law Firms in Global Merger Deals

(Thanks to Economist)

The UK law firms appear more global than their US counterparts, yet recent data on numbers and values of global merger deals indicates otherwise. (HT to Robert Sawhney)

Reuters has published details of the first half of 2010, and they make interesting reading. Essentially they confirm the historical records of these law firms. There has been little successful challenge to the hegemony of this group over the last 40 years. Quite remarkable endurance.

Here's the table:

Rank  Legal advisor          Value of deals US$m  Mkt share  No. deals
1     Skadden                136,667.8            12.8       82
2     Cleary Gottlieb        111,026.6            10.4       57
3     Wachtell Lipton        93,622.0             8.8        30
4     Simpson Thacher        90,997.7             8.5        76
5     Dewey and LeBoeuf      77,562.5             7.3        34
6     Freshfields            69,213.6             6.5        88
7     Blake Cassels          66,547.1             6.3        63
8     Sullivan and Cromwell  65,770.7             6.2        46
9     Davis Polk             62,454.8             5.9        39
10    Gibson Dunn            62,390.6             5.9        56

Only two non-US law firms appear in the list, Freshfields (UK) at 6, and Blake Cassels (Canada) at 7. And apparently Linklaters comes in at 11. As for Clifford Chance it didn't even figure in the top 25.

While Skadden worked on 82 deals worth $137 billion, Wachtell only needed 30 deals at $94 billion to come third in the list. Given Wachtell's unique billing structure, one can understand how this comes about.

What is clear is how both Skadden and Wachtell have been able to maintain their lead in this area since they created the hostile Mergers and Acquisitions field back in the 1960s and 70s. Moreover, Joe Flom and Marty Lipton took their firms in radically different directions: Skadden went large and global; Wachtell stayed New York based and boutique. Yet in each of their ways the innovations they introduced have let their firms endure and succeed through many economic cycles. More on Skadden and Wachtell here and here.

If I were the managing partner of a Magic Circle law firm, I would be scratching my head furiously wondering how I could break into this market. Now imagine if Freshfields and Davis Polk were to merge (assuming no great conflicts), that really would shake up the positions on the table. Mind you if I hear something along the lines of "The proposed firm merger fell through because of differences in cultures", I think I'll scream. I am becoming more and more convinced this is a cop out.