June 9, 2014
Recent law graduates should not get their hopes up, however; overseas expansion, not domestic hiring, is to thank for the increase. As the journal itself put it, “almost all of the boost came from a flood of foreign lawyers to U.S. based firms through international mergers.”
Interestingly enough, fewer of these international law firm mergers appear to have taken place in countries you might expect, like Canada, Australia or EU member nations. It sounds as though many expansions represented firms’ strategic entrances to developing markets in South America and Africa. Here are a few reasons Large Law firms are crossing the map:
- Domestic demand for legal services has stayed relatively static for almost a half-decade now, so firms that want to grow need to look outside U.S. borders. This same phenomenon is playing out for businesses in other industries; they are looking abroad for growth, so their law firms are, too, in order to ensure they are keeping pace with their clients.
- To build on that, certain foreign markets may be, by some observers’ standards, underserved by attorneys and law firms. Many of the former Soviet Republics, for example, have fewer lawyers and law firms than one might expect, based on the number of legal professionals in similar economies. That makes them an appealing target for expansion.
- Several AM 250 law firms, including Williams Mullen, Greenberg Traurig and Covington & Burling, have recently opened new units focused specifically on Africa. Singleton McAllister, who leads Williams Mullen’s Africa group, told the Washington Post that Africa “is becoming a fast-growing economy with a middle class and tons of opportunities for the U.S. and Africa with trade, government relations and infrastructure projects.” An April report from the World Bank bears this observation out, the paper noted. That report shows that GDP in sub-Saharan countries other than South Africa grew 5.8 percent in 2012. Globally, it was just 2.3 percent.
- As for Asia, the World Bank has projected that Gross National Product of Asian countries other than Japan will grow by more than 250 percent. That means there is plenty of economic growth in the forecast, and law firms want to be a part of it.
The final interesting observation to make may be that the enthusiasm Large Law firms have had for international expansion is notable, given that it is not easy to undo a push into a new market. That Large Law firms are taking such dramatic action may say a lot about the prospects for growth in the U.S.