Four of the five magic circle law firms will step into an emerging international elite, advising on only the biggest deals and paying the most lucrative partner salaries, according to legal market guru Alan Hodgart.

In an interview with the Gazette, Hodgart, a consultant at business advisers H4 Partners, predicted that Linklaters, Freshfields Bruckhaus Deringer, Allen & Overy and Slaughter and May had already booked a place among the new ‘global elite’.

He said that Clifford Chance, formerly the biggest firm in the world, is at a ‘fork in the road’ following restructuring and must decide where its priorities lie.

Below the elite will sit 30 ‘business law’ firms – larger firms set up to provide a comprehensive array of legal services, Hodgart predicted. He cited DLA Piper as the prime example of an emerging business law firm, with Clifford Chance a potential candidate.

Hodgart outlined his views on the emerging global legal market at the Managing Partners Summit earlier this year, splitting it into four sectors (see [2009] Gazette, 11 June, 6). His predictions this week follow the financial results season and a number of restructurings.

‘The "pseudo-strong" ride the boom on the way up, when the work is rolling in for everyone,’ he said. ‘But from now on, we discover who is strong in reality.’

He predicted that firms pushing for a place in the global elite will shed foreign offices over the next three to four years and focus instead on the 10 global capital markets centres. Meanwhile, firms heading into the business law sector will expand to comprise 5,000 lawyers in 50 worldwide offices, targeting the 500 biggest companies in the world. ‘There’s no shame in going either way,’ Hodgart said.

He predicted that US firms Wachtell Lipton Rosen & Katz, Cravath, Davis Polk, Sullivan & Cromwell and Simpson Thatcher & Bartlett would make up the rest of the global elite. He believes that Shearman & Sterling, Cleary Gottlieb and Skadden are not yet guaranteed a place.

Hodgart based his predictions on data held by H4 Partners’ research unit.