The global managing partner of magic circle firm Allen & Overy has predicted some law firms could be generating revenues of up to £9bn by 2023.
Wim Dejonghe, speaking at the International Bar Association conference yesterday, said consolidation in the market and increased globalisation will mean firms grow significantly in the coming years.
But Dejonghe, whose own firm reported revenues of £1.19bn for 2012/13, said there will be limits to how big firms can grow and that the legal profession would not become like the accountancy industry, where revenues are concentrated on four big firms.
‘We now have 65 law firms with revenues more than half a billion dollars [£310m],’ he said. ‘In 10 years’ time we will see firms with $5bn revenue easily - they may have $10bn or $15bn. There is further consolidation of the market to come.
‘There is definitely a trend towards globalisation and there will be fewer but larger firms playing in that market. But I don’t see consolidation like we have seen in the accounting industry because of the potential for a conflict of interest. And how large can one partnership be? We are one global partnership with 530 partners, and it’s challenging.’
Dejonghe said his firm’s growth had been achieved through a mixture of lateral hires, recruitment of teams of lawyers and mergers with existing firms. Often, he added, growth in a new market has come through a mutually beneficial relationship with another firm rather than any acquisition.
‘We work in 100 countries although we only have offices in 29. You need a network of law firms with whom you can work on a regular basis,’ he said.
‘There is only so much investment you can do - not just financially but culturally. You have to make sure when you expand and go into new market then partners integrate with the rest of the firm. We will not just go into a new country and plant flags - at least one partner must go on the ground and make sure integration works.’