Magic Circle (law firms)

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The Magic Circle is an informal or journalistic term for the perceived leading corporate law firms headquartered in the United Kingdom,[1][2][3] and the leading London-based commercial barristers' chambers.

Law firms

History

The magic circle of is a “journalistic device, coined by legal reporters in the wake of the break-up of its predecessor, 'the club of nine'.”[3]

The ‘club of nine’ was an informal group of law firms that comprised Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Herbert Smith, Linklaters, Lovells, Norton Rose, Slaughter and May and Stephenson Harwood.[3] The members of the ‘club of nine’ had an informal ‘no-poaching' agreement and the firm’s senior partners would meet.[3]

In 1996, Stephenson Harwood was asked to leave the ‘club of nine’ due to its stagnant performance. The ‘club of nine’ was disbanded in 2000.[3]

The magic circle, contrary to the ‘club of nine’, isn’t an informal grouping of law firms. It is a journalistic device and its membership isn’t exclusive. Initially, the magic circle's membership was described by commentators as comprising the UK firms with strong corporate practices or international work. At the time, these firms were Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters, and Slaughter and May.[3]

At the time that the term was coined, Herbert Smith’s corporate practice was focused on privitisation work, which had dried up. Arguably, for this reason, it was not included in the initial magic circle.[3]

In 2004, Slaughter and May's then senior partner, Tim Clark, said: “It's a funny concept. I don't know where the term came from or who founded it. It's mainly something that comes up when we talk to journalists or they talk to us. We don't describe ourselves as a magic circle firm in any of our marketing material.”[3] Linklaters’ then head of corporate, David Cheyne, said: “City law firms years ago used to provide information to each other so they could keep in touch with what was going on, but that ended yonks ago... It seems to be a term to describe the leading City firms and there is some truth in it.”.[3] Then corporate partner at Herbert Smith Freehills and former investment banker Henry Raine said: “The phrase was coined by a legal magazine and referred to firms which were very strong in corporate or international work. At the time, Herbert Smith was languishing in the corporate stakes, and so was consigned to the outer darkness.”.[3]

Constituents

The law firms generally described by commentators as comprising the Magic Circle are:[2][4]

In the past, Herbert Smith Freehills has also been considered to form part of the magic circle. [5]

These firms consistently have among the highest earnings per-partner and earnings per-lawyer of UK-headquartered law firms.[citation needed] Those UK-headquartered firms commonly regarded as the main competitors of the Magic Circle are sometimes referred to as the "Silver Circle"; these firms are generally smaller than the members of the magic circle in revenues, but also have a level of earnings per-partner and earnings per-lawyer which are far above the average for UK-based law firms[6][7] (and, in some instances, higher than members of the magic circle).

In 2016, four members of the Magic Circle were among the ten largest law firms in the world measured by revenues, with Clifford Chance, Freshfields Bruckhaus Deringer, Allen & Overy, and Linklaters respectively the sixth-largest, seventh-largest, ninth-largest and tenth-largest by this measurement.[8] In 2016 Slaughter and May was the 48th-largest law firm in the world by this measure, with revenues of $793.2m.[8]

Revenues

10 largest law firms in the world measured by 2015 revenue
Rank Firm Revenues Location of headquarters
1 Latham & Watkins $2.65b United States
2 Baker & McKenzie $2.62b United States
3 DLA Piper $2.54b United States/United Kingdom
4 Skadden, Arps, Slate, Meagher & Flom $2.41b United States
5 Kirkland & Ellis $2.3b United States
6 Clifford Chance $2.11b United Kingdom
7 Freshfields Bruckhaus Deringer $2.03b United Kingdom
8 Dentons $2.03b United States/United Kingdom
9 Allen & Overy $2.02b United Kingdom
10 Linklaters $2.01b United Kingdom


10 largest UK-based law firms measured by 2013 worldwide revenues[9]
Rank Firm Revenues
1 DLA Piper £1,566,300,000
2 Clifford Chance £1,359,000,000
3 Linklaters £1,255,100,000
4 Allen & Overy £1,234,300,000
5 Freshfields Bruckhaus Deringer £1,232,000,000
6 Norton Rose Fulbright £1,152,000,000
7 Hogan Lovells £1,098,000,000
8 Herbert Smith Freehills £800,000,000
9 Dentons £807,300,000
10 CMS £710,400,000

Criticism and commentary

In 2013, commentators argued that the term will lose its relevance. Moreover, the validity of term should be considered. Clifford Chance’s profitability does not match the other magic circle firms and Slaughter and May’s revenue is half the size of the other magic circle firms. [10]

In 2016, in terms of litigation, commentators have noted that the Herbert Smith Freehills, Hogan Lovells, Clyde & Co and Addleshaw Goddard are on par with the magic circle firms.[11]

Barristers' chambers

The following barristers' chambers in the United Kingdom are occasionally, by analogy, described by commentators as the Bar's Magic Circle:[12]

Rankings

See also

References

  1. ^ "Different types of law firm - Chambers Student Guide". Chambers Student. 
  2. ^ a b "Clifford Chance Is Top U.K. Law Firm as Revenue Falls". Bloomberg Businessweek. 8 July 2010. Retrieved 9 May 2011. 
  3. ^ a b c d e f g h i j "It's a kind of magic". The Law Gazette. 21 May 2004. Retrieved 9 May 2011. 
  4. ^ "LawBritannia Legal Glossary: Online UK Law Careers Counselling". 
  5. ^ https://www.ft.com/content/343bd57e-6ccb-11da-90c2-0000779e2340
  6. ^ "Silver Circle". The Lawyer. 3 September 2007. Retrieved 25 October 2010. 
  7. ^ "'Silver circle' firms upset the legal order". The Times. 28 August 2005. Retrieved 25 October 2010. 
  8. ^ a b "Global 100 2016". Legal Business. Retrieved 27 November 2016. 
  9. ^ "LB100 2014: The Main Table". Legal Business. 2 September 2014. Retrieved 10 February 2015. 
  10. ^ "2018: The magic circle will be no more - The Lawyer - Legal News and Jobs - Advancing the business of law". 2 September 2013. 
  11. ^ https://www.thelawyer.com/issues/18-january-2016/leader-in-litigation-there-is-no-magic-circle/
  12. ^ Bar Magic Circle, AllAboutLaw; Glossary of Law Terminology, University of Exeter; "Set Point", The Lawyer, 30 October 2000; The Modern Bar: diverse and open to all, fn 7.
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