How the Magic Circle Lost the Battle for New York
Despite decades of effort and millions of dollars spent, the U.K.'s Magic Circle firms still haven't made a dent in the New York market.
The New York legal market is at once extremely sophisticated and frustratingly provincial. A deep conservatism runs through the culture of the city's lawyers and law firms—and perhaps even more significantly for incoming firms trying to win work, through the buying habits of clients. As outsiders encroaching on this insular community, the odds were stacked against the Magic Circle. "We were always going to be viewed as British firms coming over and planting a flag," says Linklaters's Norton.
The U.K. firms clearly have not done as well as they would have liked, given their own high standards. But they've not been alone in their struggles—it's been hard for other outsiders, too. "It's a really tough market to break into—it takes time," says Kenneth Doran, managing partner at Gibson, Dunn & Crutcher, which in 1982 became the first major U.S. firm not based in New York to open in the city. (New York is now Gibson Dunn's largest office by head count.) It is true that whenever firms enter a new market, perception—in the eyes of rivals, clients, and legal directories—lags behind reality. But each of the the U.K. firms have now been in New York for more than a quarter of a century.
Still, pulling out of the U.S. isn't an option. The global significance of the U.S. economy—and more generally of U.S. law, which is increasingly challenging the dominance of English law in markets such as Hong Kong—makes it too important a market for any international firm to ignore. Norton says that while just 6 percent of Linklaters's 2,700 attorneys are based in the U.S., more than 40 percent of firmwide revenue—around £500 million ($810 million)—is generated by work involving a U.S. component.
The Magic Circle firms may be battle-worn, but they remain determined to finally solve the U.S. conundrum. And with their newly honed strategies, there are signs that the firms may finally be adapting to the American market, rather than simply expecting the market to adapt to them. "It's fair to say that it has taken some time for us to refine what our goal really is," says Linklaters U.S. co–managing partner Tenaglia. "We know we can't do everything—our clients don't want us to—but we definitely want to be doing more. It's the most important battle we can fight at this stage."