US firms use their high profits to invest in Germany

Like digitalization, the discussion surrounding costs and high lawyer fees knows no national boundaries: in the US, market observers are already scenting the downfall of US-style “big law”. The 2015 financial statistics show that growth at the top-flight US firms is slowing down, more dramatically in fact than it has since the 2008 downturn: the number of equity partners is dropping, as only this makes it possible to keep profits per partner high.

Top 25 Lateral Moves 2017

Top 25 Lateral Moves 2017

From the perspective of European firms, however, the profits of US competitors are still astronomical. Above all, this profit gives them room to invest in high-profile laterals, such as those who characterized the year 2016 in London and Germany. The notable US firms [Kirkland & Ellis[[href][1582]]] and [Latham & Watkins[[href][1525]]], for instance, enticed several drawing cards away from competitors to enhance their activity in Germany. Such an abundant list of top partner moves has not been seen for a long time. That said, with such favorable exchange rates for the US firms, their global investments are not as immense as they appear from a European perspective.

What is more, some of the pay structures that are geared toward individual turnover are making shopping sprees all the easier. Other US outfits are already sounding out the market and knocking on the doors of renowned partners. It is a known fact that at least two US firms have long had a huge interest in Germany.

The US firms can certainly cope with the comparatively low German hourly rates, provided that a large portion of their turnover does not depend on them. Accordingly, their activity in Germany is limited – as seen at [Skadden Arps Slate Meagher & Flom[[href][350]]] and [Weil Gotshal & Manges[[href][1174]]] – and their reorganization efforts with German teams are consistent.

[Latham & Watkins[[href][1525]]], for example, lost a number of partners to competitors in recent years and then brought in laterals who fit in better with the lucrative international work that it needs in order to remain the US firm with the highest turnover. That the reorganization does not always go according to plan appears to be par for the course: the firm lost two of its most highly respected corporate partners to [Gibson Dunn & Crutcher[[href][1600]]].

Find out why British firms are feeling the heat from US competition

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