"If You Can Make it Here, You Can Make it Anywhere"

The Lawyer (UK) is out with its Global 100 for 2004 and their gloss on the raw statistics, understandable given their perspective, highlights the different approaches to globalization taken by UK and US firms. 

One strategy to adopt vis-a-vis globalization is:  Just say no.  If you are exceptionally strong in New York, where "the business eco-climate is such that firms can bill in a way unheard of elsewhere on the planet," this can make sense.  Just ask Wachtell, Cravath, Davis-Polk, Paul-Weiss, or Simpson-Thacher.

If you do embrace having global reach, however, you still need to know why you're doing it; as one amusingly dyspeptic New York partner puts it, "Sticking flags in the ground is not a strategy."  This remark reveals to me why the leading UK firms' penetration of the US has been either very small-scale (Lovells, Allen & Overy, Freshfields) or still, shall we say, a work in progress (Clifford Chance).  Simply put, it seems unclear why they're here.  Conversely, when US firms launch in London or, more currently, on the Continent, they typically do so in pursuit of specifically identified practice specialties such as project finance or—if one has strong ties to an international investment bank, as, say, Sullivan & Cromwell has with Goldman-Sachs—branching out in service to that client.  With a strong New York profit base and a targeted reason for being "on the ground" in Europe, opening up there can make sense.

However, international expansion comes at a cost:  This may not be revelatory or even surprising, but the article quantifies just how expensive it has been, at least for the elite UK firms.  It details how Allen & Overy, Clifford Chance, Freshfields, and Linklaters have each invested in globalization since 1999-2000 (primarily through mergers) and shows starkly that while bigger certainly means more revenue and more lawyers, in no case did those firms raise profits per partner over the last five years, and indeed only Freshfields managed to keep it level.

Finally, the article displays a chart whose beauty is entirely in the eye of the beholder—and not, I hasten to add, in the interpretive gloss the author of the article puts on it:

According to the author, this chart "is an endorsement of the UK model."  Huh?  If the yardstick is PEP—which they chose (note it's in ££ not $$)—then all five UK firms reporting for duty here are in the shallow end of the pool vis-a-vis their peers.  Rather, the interesting message this delivers for me is two-fold:  First, if you have a strong New York (or London--cf. Slaughter & May) base with a sophisticated financial practice, you are in the chips.  And second, don't much that up:  If you expand globally, don't do so promiscuously, opening offices helter-skelter, but concentrate on where the high-value work is:  London, Frankfurt, Paris, Hong Kong.

As a native Manhattanite, I've long believed in New York exceptionalism:  That it truly is different here.  Graphic proof, above.