Globalisation of Law Peter Charlton London Managing Partner

Globalisation of Law Peter Charlton London Managing Partner – Clifford Chance 13 January 2003 C L I F F C H A N C O R D E

Summary l My perspective l About law firms! l The Law Firm market l Historical overview l The development of Clifford Chance l What next? C L I F F C H A N C O R D E

My perspective l l l Started legal career in 1979 with Clifford Chance Specialised in Company law/Mergers & Acquisitions Became a partner in 1986 Became Managing Partner (Corporate) in 1993 and Managing Partner (London) in 2000 Practitioner/Manager not an academic Totally subjective C L I F F C H A N C O R D E

About law firms! (and lawyers) l Partnership model (limited access to capital) l Flat structure l Highly consensual l Conservative l Individualistic and independent – management resistant l Regulated and jurisdiction based l Relatively slow to internationalise – compared to other professional services organisations – accountants, management consultants, investment banks etc C L I F F C H A N C O R D E

About law firms! (cont’d) l l Business law firms Other practices (divorce, family, criminal, wills and probate, residential conveyancing, welfare and immigration) C L I F F C H A N C O R D E

About law firms! (cont’d) Business law firms – distinguished by work type l l l Corporate Finance Capital Markets Litigation and Dispute Resolution Real Estate Tax, Pensions & Employment C L I F F C H A N C O R D E

About law firms! (cont’d) … and distinguished by client l l l Banks, insurance companies and other financial institutions National, regional, global corporations Markets, government agencies, local authorities etc C L I F F C H A N C O R D E

Law firm market High Shapers Incumbents Full service integrators Profit Specialists Low Small Source: Mc. Kinsey Size Large C L I F F C H A N C O R D E

Law firm market (cont’d) 1980 1400 1300 Specialists 1200 Shapers 1100 1000 PPP (£ 000’s) 900 800 700 600 500 400 300 200 Incumbents 100 0 0 200 400 600 800 Full service integrators 1000 1200 1400 1600 1800 2000 No. of fee earners C L I F F C H A N C O R D E

Law firm market in London 2001 1400 Specialists 1300 Shapers 1200 S&M 1100 1000 PPP (£ 000’s) 900 H. Smith Mac. Farlanes 800 700 Ashursts Gouldens 600 500 TSB T. Goddard 400 CC Freshfields L’laters A&O Lovells N. Rose DLA S&S CMS 300 S. Harwood 200 HSE Full service integrators Incumbents 100 0 0 200 400 Eversheds 600 800 1000 1200 1400 1600 No. of fee earners 1800 2000 C L I F F C H A N C O R D E

Law firm market - Global 2002 1900 Shapers Specialists 2000 WLR 1800 1700 1600 1500 PPP (£ 000’s) 1400 1300 1200 1100 1000 CSM PW MT DPW STB S&C SA S&M 900 800 700 AO JD 600 LL FF CC 500 B&M 400 300 200 100 E Incumbents Full service integrators 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600 No. of fee earners 1000 C L I F F C H A N C O R D E

Historical Overview l l 1860 – 1900 Apex of British power and influence Establishment of English law as accepted system in international trade and contractual relations City of London is the dominant international financial market C L I F F C H A N C O R D E

Historical Overview (cont’d) 1860 – 1900 l Establishment of US nation and unification of Germany l Industrialisation of US and German economy l Creation of single US market l Development of national brands in US l Immigration to US l US overtakes the UK in industrial production C L I F F C H A N C O R D E

Historical Overview (cont’d) 1900 - 1945 l l 1914 - 1918 First World War Boom/Bust – 1929 crash and Great Depression l 1939 -1945 Second World War l Decline of UK as world and economic power C L I F F C H A N C O R D E

Historical Overview (cont’d) 1945 -1980’s l Consolidation of the US economic position l Cold War l Reconstruction in Europe – creation of EU l Technological and Communications revolution l Regulation and Deregulation C L I F F C H A N C O R D E

Historical Overview (cont’d) 1980’s l Industrial Consolidation l Development of service economies l Rapid technology and Communications development l Privatisation l Deregulation of markets l City maintains position as international financial centre l US – dominant global capital market – increased importance of US law l Increasing sophistication and complexity l Anglo Saxon transaction techniques dominate C L I F F C H A N C O R D E

The Development of Clifford Chance Coward Chance (Est 1802) 1987 CLIFFORD CHANCE 2000 Mergers with Rogers & Wells (US) and Punder (Germany) Clifford-Turner (Est 1900) C L I F F C H A N C O R D E

Development of Clifford Chance – Offices worldwide 2003 Berlin (95) Luxembourg (55) Munich (93) Dusseldorf (218) Prague (43) Warsaw Frankfurt (776) (86) Budapest )80) Moscow (84) Amsterdam (297) San Francisco (64) Palo Alto (7) Los Angeles (15)San Diego (11) New York (964) Washington DC (169) London (2, 520) Brussels (104) Paris (462) Madrid (198) Tokyo (68) Shanghai (35) Beijing (26) Barcelona (55) Milan (138) Hong Kong (367) Bangkok (64) Padua (13) Rome (57) Singapore (53) Dubai (50) Sao Paulo (33) C L I F F C H A N C O R D E

Development of Strategy l l l Development outside London initially small scale, opportunistic and partner/client led Merger in 1987 provided impetus and released energy High ambition, need to differentiate and willingness to invest By 1989 – strategy developed to be the leading European Firm By 1999 – strategy developed to be the leading Global Firm Mergers in 2000 in the US and Germany C L I F F C H A N C O R D E

Development of Clifford Chance – Global Network Merger with Rogers & Wells and Punder Coward Chance and Clifford-Turner merger 1802 1968 London Paris Brussels 1972 1974 1976 1980 1991 1992 1993 1981 1986 Madrid 1987 Amsterdam Moscow Frankfurt New York Dubai Tokyo Hong Kong Singapore 1996 1995 1998 1997 Warsaw Prague D’dorf Barcelona Padua Milan Rome Budapest 2000 1999 Luxembourg 2003 San Francisco Palo Alto Washington Bangkok San Diego Sao Paolo Shanghai Beijing Los Angeles Offices closed: Chicago Bahrain Jeddah Riyadh Bahrain Sharjah Leipzig Ho Chi Minh City Hanoi Munich Berlin C L I F F C H A N C O R D E

The firm is now truly global … World-wide Revenues by Region - FY 2001/02 £ 1 bn Middle-East 0. 5% Americas 24. 7% London 42. 5% Asia 7. 3% Continental Europe 25. 0% C L I F F C H A N C O R D E

… and well balanced across practice areas World-wide Fees by Practice Area - FY 2001/02 £ 1 bn Tax Pensions & Employment 8. 5% Banking & Finance 22. 4% Real Estate 7. 5% Litigation & Dispute Resolution 22. 0% Capital Markets 11. 7% Corporate 27. 7% C L I F F C H A N C O R D E

Balance of practices is different across practice areas in certain regions C L I F F C H A N C O R D E

What next? l Economic uncertainty l Slow down/recession l Further consolidation l Increased regulation l Forces of globalisation continue C L I F F C H A N C O R D E

Law firm market - Global 2002 1900 Shapers Specialists 2000 WLR 1800 1700 1600 1500 PPP (£ 000’s) 1400 1300 1200 1100 1000 900 CSM PW MT DPW STB S&C SA S&M 800 700 AO JD 600 LL FF CC 500 B&M 400 300 200 100 E Incumbents Full service integrators 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600 No. of fee earners London-1/1335846/2 C L I F F C H A N C O R D E

Questions C L I F F C H A N C O R D E