A survey has revealed that the UK's top ten firms are significantly outperforming their competitors.
PwC's 2012 Law Survey says that the biggest players have reinforced their dominance recording "significantly better" results than their competitors. In particular, 44% of the total income received by the UK's top 100 firms went to those in the top ten. There is also an average 11% gap in profit margin between top ten firms and those in the following tier of 15.
The results may not be that surprising: as firms get larger through merger, so income will concentrate in a smaller number of bigger firms. And in a fiercely competitive market, firms with top end brands, clients and lawyers are in a relatively strong position. Plus the larger firms are also better hedged against the stagnant domestic market through their overseas operations.
Further down the pecking order, PwC reported that niche firms tended to do better than "those which seek to provide a full service offering with no differentiation". In summary the report seems to suggest:
How it will look
On the upside, the report also said that 2012 was "a solid year for the legal sector". Although it went on to add that "about half the top 50 firms believe they will outperform the market for the period to 2015" which seems more of a statistical inevitability than an ability to see into the future.
RollOnFriday confidently predicts that about another half will underperform compared to the market.
Tip Off ROF
PwC's 2012 Law Survey says that the biggest players have reinforced their dominance recording "significantly better" results than their competitors. In particular, 44% of the total income received by the UK's top 100 firms went to those in the top ten. There is also an average 11% gap in profit margin between top ten firms and those in the following tier of 15.
The results may not be that surprising: as firms get larger through merger, so income will concentrate in a smaller number of bigger firms. And in a fiercely competitive market, firms with top end brands, clients and lawyers are in a relatively strong position. Plus the larger firms are also better hedged against the stagnant domestic market through their overseas operations.
Further down the pecking order, PwC reported that niche firms tended to do better than "those which seek to provide a full service offering with no differentiation". In summary the report seems to suggest:
- Elite international firms (eg Magic Circle, Herbies, Ashurst, Hogan Lovells): quids in, don't stress.
- Big global outfits (eg Eversheds, DLA, Bakers): you'll do OK, just not quite are well as the guys above you.
- Niche City players (eg Travers Smith, MacFarlanes, SJ Berwin): stick to your knitting and you'll be able to keep the Porsche.
- Everyone else: all the above will take your breakfast, and the Chinese and Indians will take your lunch and dinner. Panic Now!
How it will lookOn the upside, the report also said that 2012 was "a solid year for the legal sector". Although it went on to add that "about half the top 50 firms believe they will outperform the market for the period to 2015" which seems more of a statistical inevitability than an ability to see into the future.
RollOnFriday confidently predicts that about another half will underperform compared to the market.
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SJ Berwin
Addleshaw Goddard
CMS
Simmons & Simmons
Stephenson Harwood
Nabarro
Field Fisher Waterhouse
Osborne Clark
Berwin Leigton Paisner
Taylor Wessing
Olswang
It *might* be the case that a handful of firms - and Travers Smith and Macfarlanes are the obvious examples, with Dickson Minto on a smaller scale - can continue to be successful whilst remaining at the £100 million revenues size and focusing on high end niche work. SJ Berwin is far too large to be a niche player though, and much of what it does is generalist.
There are going to be massive changes in the market over the next five years.
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I can't see 2012 without registering, but the 2011 sample size is:
"The results include 80% of the top 10 firms, 73% of the top 25 firms, 78% of the top 50 firms and 58% of the top 100 UK law firms."
Given how varied the top 100 law firms are, is 58% a representative enough sample? The profession is not like other industries where you can compare apples with apples, is it?
I wonder whether 2012 has more firms participating.
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I can't see 2012 without registering, but the 2011 sample size is
"the results include 80% of the top ten firms, 73% of the top 25 firms, 78% of the top 50 firms and 58% of the top 100 law firms"
Given how varied the top 100 law firms are, is 58% a representative enough sample? The profession is not like other industries where you can compare apples with apples, is it?
I wonder whether 2012 has more firms participating?