A perennial subject for speculation is whether or how the consolidation trend among BigLaw will end.  A primary—and by sheer headcount perhaps the prevalent—point of view is that the industrial structure of BigLaw is moving towards a bimodal distribution, with a few dozen (at most) truly Global US and UK firms, on whose empires the sun never sets, and at the opposite end of the curve a profusion of boutiques and regional powerhouses.  On this view, however, the days of the "mid-size, full service" firm are numbered.

I think it's fair to say that the Bimodal Model represents a relatively straightforward linear extrapolation of recent and current trends, so if, as Paul Brest, Dean of Stanford Law School when I was there, used to say, "the best predictor of tomorrow's weather is today's," then endorsing this view is plausible and rational.

But as faithful readers may intuit, I have an intellectual aversion to subscribing to the common wisdom without at least tossing a few questions at it.   Today my question is, "Won't the multiplication of client conflicts in bigger and bigger firms put a ceiling on size?"

Helpfully, the FT gives us some insight.  They begin with the story of how, when "Australia's Macquarie Bank started considering a bid for the London Stock Exchange," they found every single Magic Circle firm conflicted out from representing them, and ultimately went with Baker & McKenzie, which scant years ago would barely have been visible in the M&A tables.

Some observers who are more than qualified to know think this is not just an anecdote, but a trend: 

"Keith Clark is international general counsel at investment bank Morgan Stanley, and was previously chairman of Clifford Chance. [...] He says: "In the London marketplace, you have a situation where you have got half a dozen law firms servicing a huge number of the big transactions, whereas in New York you have far more law firms. When you get into hostile M&A, those conflict issues really come into play."

"He believes the situation will only get worse."

It may be that there are "more" New York firms, but interestingly, the FT characterizes the rules on conflicts as "looser" in the UK than they are here, and still the problem arises.

I'm not sure I would characterize our rules as looser or stricter than the UK's, I just think they're different: In the UK, conflicts are analyzed from the perspective of the transaction, whereas here of course they're analyzed from the perspective of the client.  UK rules pre-empt a firm from acting for two clients whose interests are adverse in a given deal, while US rules bar firms from acting against the interest of a client even in matters wholly unrelated to the firm's representation (absent consent, of course).

An unintended consequence of the US-style rule is that firms have reason to turn away individuals or smaller clients for fear of being conflicted out of a big deal later for the sake of a small fee now. And according to McDermott Will & Emery's London managing parner, it's happening. So the US rule, superficially more "protective" of the client's interests, may deprive them of their firm of choice! Be careful what you wish for.

Pushing right back against the heightened problem with conflicts is, I believe, a more potent force:  Economics and business sense.  Again to Keith  Clark:

"[Because of increased globalization,] the ability to service a deal across a variety of jurisdictions is more significant than it was last time around. That tends to consolidate the work into larger law firms."

In other words, the larger firms' global footprints become, and the more attractive they are to dealmakers on the economic and business merits, the more likely they'll face conflicts. 

Doesn't this cry out for a "re-think" of how the profession analyzes "conflicts"?

I for one would nominate the jurisprudence of conflicts for a doctrinal re-evaluation in light of 21st-Century realities.   Being precluded from engaging the firm of your choice for what is, by hypothesis, a big deal transaction, is a far more destructive wrench in the gears than what is often the remote and hypothetical "emanations and penumbras" of a conflict—which can also be used strategically as a weapon to deprive an adversary of their counsel of choice.

But back to where we started:  Will "conflicts" law ultimately put the brakes on global consolidation of BigLaw? 

Actually, we don't have the privilege of answering that question:  Clients do.  They will vote their economic interest, and if globe-spanning firms are the model they prefer, we will evolve to match their preference. 

Conflicts, after all, are always and everywhere merely in the eye of the beholder.