Law firms are facing upheaval from several sides

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This is “a novel moment,” says Alan Mason, global managing partner of the international law firm Freshfields Bruckhaus Deringer. And it’s a moment that may impact the position of the world's leading business law firms.

Europeans are concerned concerning the revenues of US firms Latham & Watkins and Kirkland & Ellis, which can exceed $5 billion in 2022, and concerning the expansion of US firms in London. They at the moment are trying to answer the push for size. Freshfields, one in all the UK's top “Magic Circle” law firms, is one in all them.

The challenges facing law firm leaders are further compounded by the threat that generative artificial intelligence poses to an industry whose primary outputs are based on language.

But while AI may have an effect, particularly on law firms' data strategies – and Mason admits he’s obsessed together with his own strategy – it’s just one in all quite a few challenges causing profound competitive turbulence out there, he argues.

“Every law firm looks at its client portfolio and considers how it might transform its business to fulfill existing and future needs,” he notes.

Traditionally, law firms' strategy was to construct and maintain long-lasting and comprehensive relationships with their clients. That's now not appropriate, he says. “Today you could have to have 'goal practices' which might be rated one, two or three – either by geography or by practice area. If you don't try this, you risk clients going elsewhere.”

How these firms will mix human expertise and technology to offer legal advice has yet to be decided – as has the query of what type of people will work there.

This ongoing reshaping of the legal career is clear within the firms and individuals that top the Financial Times Innovative Lawyers Report for Europe 2024.

For example, the winning Innovation for Private Capital Legal Expertise was nominated by Boston-based law firm Ropes & Gray for its work in helping private fund clients manage regulatory risks and liabilities of their investment portfolios. Private fund work is one in all the firm's core offerings and forms the premise of its international expansion to grow to be the kind of client “destination” that Mason envisions.

A key element of the firm's innovation is that it incorporates extensive data analytics, is multidisciplinary – including using behavioral science – and focuses on prevention quite than cure. It is a chief example of how legal services are being transformed by the convergence of technology, data and expertise from other disciplines.

Yet it’s precisely these trends that may enable the legal departments of the Big Four accounting firms to appreciate their potential and play a number one role within the delivery of key legal services.

In the general FT Index rating (see below), the most effective firm in sixth place is Spanish law firm KPMG Abogados, which has its headquarters in Europe but relies outside the UK. Its software product Katalyst, which improves the efficiency of in-house teams, was developed by its legal department. It is currently available to clients as a subscription and is utilized in greater than 90 legal practices.

Although Katalyst doesn’t technically provide legal advice, the mid-sized firm's attorneys are also valued within the local marketplace for their legal expertise.

The trend amongst traditional legal practitioners to enhance legal advice with other disciplines is unstoppable. Marion Palmer, winner of the Innovative Practitioner Award, is neither a lawyer nor a partner at her firm Hogan Lovells.

She is a scholar and her job is to enable her fellow lawyers to offer expert legal advice and construct persuasive arguments in litigation.

Experts like Palmer are critical to firms looking for to develop and sustain their destination practices. And it’s thanks partly to Palmer that Hogan Lovells has built a robust repute within the life sciences sector.

The overall winner within the European rating of law firms is A&O Shearman, which is currently undergoing a metamorphosis process. As the product of a transatlantic merger, it marks a milestone within the transformation of the large law industry.

The company owes its top spot within the FT index primarily to its forward-looking approach to generative AI and the services and products it has developed based on this technology.

However, the brand new company will face significant challenges in integrating the partnership cultures of the US and the UK and ensuring it’s greater than the sum of its parts.

Hervé Ekué, managing partner and member of the Executive Committee and the Board of Directors, argues that A&O Shearman's size and geographic reach will enable it to win latest business that neither firm could have imagined before the merger. “We have a client that’s going through an energy transition in 50 countries and 43 of our offices could help with that,” he explains.

Whether the firm becomes the “first alternative” for enough multinational clients will ultimately be the measure of Ekué's success. A&O Shearman's strategy goes beyond simply constructing practice areas: expect increased efforts to know clients' individual industries and overhauls of legal processes and company culture.

“We have to move from a reactive stance (like most law firms have taken up to now) to a proactive stance,” he says.