Magic Circle… [Poof] Gone?

Eversheds recently released study findings that found “over half of all clients think that the magic circle designation is redundant, with 94 per cent of them arguing that the profession should reclassify its peer groups.”

We certainly agree that significant pressure exists on law firms regardless of their designation as “Magic” or not*. As a result, clients are often more prone to “value-shop” law firms, but venerable designations such as the Magic Circle die hard and bet-the-house legal work from large corporates will still typically flow to these major law firms. Are all bets off with the forthcoming implementation of the Legal Services Act? No one knows.

These issues of reputation of law firms are addressed by Larry Ribstien, author of the controversial yet thought-provoking Death of Big Law. Ribstien notes in his recent publication that the only thread of stability binding major law firms together is by their “reputational capital.” Law firms cannot maintain intellectual property, it is no competitive advantage to hold hard assets and human capital can quite literally walk out the door at any time. He purports that the only assets held by large law firms is their reputation or reputational capital.



*Magic Circle law firms in the UK include: Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters, and
Slaughter & May