Booming economy and e-commerce render top firms 'secure in market dominance'

LEGAL 500: latest guide finds the fight is on to secure mergers and alliances in Europe and the US

The booming economy and 'an explosion in e-commerce work' have led to City profits 'not seen since the 1980s', according to the latest guide to commercial law firms.

This year's Legal 500 directory said the magic circle - City giants Clifford Chance, Linklaters, Allen & Overy, Freshfields Bruckhaus Deringer and Slaughter and May - are now 'secure in their market dominance'.

But new battle lines are being drawn between the magic circle on the international scene, according to the guide: 'The fight is on to secure relationships (whether it be mergers, alliances, or "friendships") with the best overseas firms in Europe and the States.'

Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May were placed in the top tier of commercial law firms.

Allen & Overy and Clifford Chance were in the next tier, followed by Herbert Smith, Lovells and Norton Rose in the third tier.

Ashurt Morris Crisp and Simmons & Simmons followed alone in the fourth and fifth tiers to make up the top ten commercial firms.

Freshfields' mergers with Deringer Tessin Herrmann & Sedemund and Bruckhaus Westrick Heller Lber meant that 'its sights are firmly set on the lucrative German market'; the guide singled out its representation of Goldman Sachs in the 6.8 billion merger of DaimlerChrysler's aerospace division.

Early indications suggest Linklaters' international alliance, which began formally in January 2000, are positive, according to the guide.

It said the high points for Linklaters this year included acting for Vodafone's hostile 113 billion bid for Mannesmann, and making an 'impressive push' into the capital markets domains of rivals Allen & Overy and Clifford Chance.

Slaughter and May continues to eschew international growth, but with the highest average profits per partner in the City - 900,00 according to sister publication Legal Business - the Legal 500 said: 'It is hard to argue that this strategy of going it alone is flawed.'

Of the national firms, the guide placed Manchester and Leeds-based Addleshaw Booth & Co and Eversheds in the top tier.

In a new category - regional firms with national profile - Birmingham-based Wragge & Co, which saw its profits leap by 30% last year, was placed alone at the top.

Legal Business, whose annual analysis of City firms was also published last week, hailed the emergence of a new global quartet displacing the magic circle on the basis of massive profits from international transactions.

The quartet consists of all the magic circle firms - except Slaughter and May.

Jeremy Fleming