During my university years when I had still planned on becoming a solicitor, few terms had captured my imagination and that of my peers like the ‘Magic Circle’. Each of us were able to rattle off the five names by heart, and almost everyone in my cohort interested in the solicitor route had at least one name down on their application list. But whilst the famous five may share a name with a magician’s society, their credibility is anything but an illusion. The firms continue to maintain some of the strongest corporate practices in the world, continuously bringing in top international work for their fee earners. But despite this ongoing success, the firms have not gone without scrutiny. A recent report by Arden Partners has scrutinised the business practices of the firms, likening them to ‘a room full of millionaires that refuse to believe that their business model is in trouble.’ Whilst some may point to the growing dominance of US firms within the UK market as confirmation of this, the overall picture is far more complicated, to say the least.
It certainly appears on the surface that US firms have the edge – the ongoing battle over remuneration has led to a boost in US offerings, with some US firms paying upwards of $200,000. Things don’t look too good on retention either, as US firms appear to have the edge over lateral hires as well as technology, offering larger teams and more US work than UK outfits. It is no surprise therefore that in 2020, 56.8% of Magic Circle leavers moved to US firms. One of the suggestions made from Arden Partners was that magic circle firms should ‘shift their strategies to focus on mid-market work’, though this would certainly contend with the elite implications of the name. The US firms have also taken the top spot-on PEP, with several soaring over £4,000,000 in recent years. When considering this, it is not hard to see the attractiveness of Arden Partner’s conclusion, with the once-reigning group of UK outfits falling short of the mark in a shifting legal market.
However, it should be noted that criticism of the group extends back almost as far as the existence of the group itself. A trawl across legal forums and news sites will bring up talk over several years of an irrelevant group on the verge of being ousted, though this state of decline has yet to reach its forewarned conclusion. Rather, a quick look at the rankings of Legal 500 firms show that the magic circle firms still dominate heavily, fitting into the Tier 1 or 2 category for a wide variety of practice areas whilst outperforming most London law firms in terms of profit. There is also still a prevailing trend of high-level training at Magic Circle firms, who have placed a stronger emphasis on structured learning as opposed to the smaller intake and on-the-job training often seen at the US outfits. Whilst neither method is a perfect fit for the entirety of the legal workforce, the shift of US firms in recent years towards more structured learning indicates a trend started and firmly held by Magic Circle firms, who have invested a significant amount into the development of associates and not just the collection of fee earners.
The reputation of both sides is immediately polarising. When discussing US firms, you often hear the mention of the mythical ‘Cravath salary’, offering eye-watering amounts to newly qualified associates. At the same time, the perception of these firms by many trainees is underlined by long hours and a sink-or-swim attitude at the firm, even if the hours are not that much different from those occupying the Magic Circle. Of course, such perceptions can never be true indications of reality, and the US firms often paired against the Magic Circle firms are often not a great reflection of US firms as a whole, which span a wide range of salaries, work-life balances and qualities of work. As such, the suggestion that US firms are simply dominating in the market is somewhat misleading.
Of course, this does not necessarily mean that there is only room for one. As the next generation of trainees make their way into the market, firms will continue to look for talent that fits their own culture and expectations. If there is a struggle within the Magic Circle to continue attracting new talent, then it does not appear to be an existential one. The range of practice areas and excellent reputations in their field will continue to ensure that, even if they bleed associates and partners to their US rivals, they remain a mainstay in the London market and a set of firms to aspire to for soon-to-be lawyers.