GaWC Research Bulletin 3

"Ten years on we believe the key players will have substantial presences in ... Asia, Europe and the US. That will be the profile of the successful global law firms."

Keith Clark, Senior Partner, Clifford Chance (quoted by Rice, 1997)
 

"Most of Freshfields investment is in building an international firm, believing this is what business clients will want in the years ahead."

Anthony Salz, Senior Partner, Freshfields (Salz, 1997: 1)
 

INTRODUCTION

According to Peter Daniels (1993: 1), the study of law has "long been the Cinderella" of producer service and world city research.¹ Despite some notable contributions (Blomley, 1987; Blomley and Clark, 1990; Clark, 1989a; 1989b; Daniels, 1993; Lynch and Meyer, 1992; Warf and Wije, 1991), we concur with Daniel's assessment. Although there has been a myriad of academic studies focused on the internationalization of producer services (e.g. Bagchi-Sen and Sen, 1997; Daniels, 1991; Enderwick, 1989; Goe, 1991; Marshall et al., 1988; Moulaert and Daniels, 1991; United Nations Center for Transnational Corporations, 1988; Warf, 1991), within this rich corpus of work the major interest has been on those advanced producer services associated with business and finance. Notably examples include: accountancy (Beaverstock 1996; Daniels, Thrift and Leyshon, 1989), advertising (Leslie, 1995; Perry, 1990), banking (Daniels, 1986; Thrift and Leyshon, 1988), business services (O'Farrell and Wood, 1998; Wood, 1991), consultancy (Daniels, Van Dinteren and Monnoyer, 1992), financial services (Gentle, 1993), and, real estate (Thrift, 1987). In this paper, it will become clear that legal firms have also been subject to similar globalizing pressures and have responded with global strategies on a par with other producer services.

In this paper, we focus on London law firms as major players in the globalization of law. London's law firms are alive to, and are responding to the needs and demands of, globalization by increasing their presence in other world cities. For a leading London lawyer, "[G]lobalization is a reality and the increasing links between Asia, Europe and the US will be the fundamental phenomenon of the next decade" (Keith Clark, quoted by Rice, 1997). There are several reasons for London's prime position in this service sector. First, London's law firms had a competitive advantage in the globalization of law services because of the legacy of the British Empire which installed English legal systems around the globe. In fact, historically London law firms have operated globally drawing up the governing contracts for the British financiers who underwrote international projects throughout the world in the nineteenth century. Today this practice continues as much of London law firms' international business concerns financial arrangements for project finance. The other main practice areas with a global scope are privatisations, which have increased in number in recent years as more countries participate in the international financial system, and mergers and acquisitions work which tends to be, but is not exclusively, in the mature economies of Europe and the US. Second, London remains the dominant financial centre in its time zone (and even in the world since the 1970s) which provides law firms there with numerous agglomeration advantages (proximity aids the close client relationships between English law firms and banks for example, and it is international financial and banking work which has helped drive the global expansion of many London firms) over other firms in other European cities in particular (see McGrath, 1994: 24-25). Third, London's geographical location and transport links are a distinct advantage facilitating easy access to the US, Europe, and Asia. Fourth, there are less intangible factors which provide a particularly conducive locale for globalization projects such as lack of regulation, English being the global language of business and the so-called lifestyle factor², the attractiveness of London for those who practice globalization. In summary, London is an obvious case study for investigating contemporary globalizing tendencies in the provision of legal services.

Mirroring their clients' interests, London law firms are transcending geographic boundaries and time-zones through overseas offices, affiliations, associations, and telecommunication technologies. We analyse this activity by focusing first, on law as a producer service and second, on London as a world city. Although relationships between the producer service and world city literatures are commonly invoked, we aspire in this paper to integrate them more fully than hitherto. In the first part, we investigate why and how London law firms are globalizing by outlining the reasons driving the globalization of law, and by describing the practices adopted by some of London's top thirty law firms to increase their global presence. In the second part, we present and analyse data to show how London's law firms fare collectively in the key globalizing arenas of the world-economy. This involves analysing both the geography of London law firms overseas branch offices, and, the world city origins of foreign law firms with branches in London. To put the London case in comparative perspective, we also look briefly at the geography of the overseas branch offices of law firms based in New York because this city dominates the US for the provision of legal services accounting for one-third of the largest 100 US legal firms (Warf, 1991). The final product is a text which makes a distinct contribution to the producer service literature in terms of one particularly neglected service and which also provides insights into London's role as a world city in contemporary globalization.

THE GLOBALIZATION OF THE LEGAL PROFESSION

Law, like other producer service activities, has grown rapidly with the restructuring of the world-economy over the last two decades. The speed of its globalization was relatively slow until the 1980s and the rapid globalization of international finance, and in particular securities markets (Daniels, 1993: 55). Law firms began to open office networks in the major international financial centres as their expertise and knowledge were needed to advise upon corporate takeovers, privatisation's and property finance. Moreover, as other producer service activities were expanding their corporate empires throughout Europe, North America and East Asia, in turn, law firms internationalised specifically to serve their corporate clientele in situ. Thus, an important determinant factor accounting for the globalization of law has been the need to provide transnational clients with knowledge and expertise through 'face-to-face' contact, and a professional service of the highest international reputation (Ascher, 1993; Labaton, 1988). This rationale partly underlies the practice of London law firms in recent years. We discuss this practice in two parts, first in terms of the specific reasons behind the decisions to go global, and second with regard to the different forms that global practice takes.

Globalization Drivers: London's Law Firms Going Global

The globalization of law firms has been facilitated by a mixture of demand and supply-side factors (see Daniels, 1993). On the demand-side, it has grown as primary, manufacturing and other service firms, of all sizes, have externalised this specialised element of the production process outside of the organisation. Moreover, we would like to suggest that this growth has been intensified from the business linkages developed between the legal profession and other producer service organizations, especially accountancy, banking and other financial services (Coffey and Bailey, 1992; Daniels, 1993; Goe, 1990). In contrast, on the supply-side, law firms have benefited from rapid improvements in information technology, telecommunications and government regulation. Thus, law firms have been able to take advantage of these opportunities for growth to supply a professional service at local, regional, country and global scales (Ascher, 1993).

Looking at these factors in more detail, there have been several key reasons why London firms have taken the decision to increase their presence in foreign markets: client demand, spreading risks, competition, merger activity, technological advances, and, European Union developments especially European Monetary Union (EMU)³. Each is considered in turn.

Client Base. The greater a firm's worldwide reach the more credible it is to the increasing number of potential clients who want their needs met on a worldwide basis. Law is a service industry whose clients' range in geographical scope. Clifford Chance has prioritized it's clients according to three geographical scales: global multinationals (which includes governments and multilateral agencies); regional corporates whose activities are either confined to the national market of one of Clifford Chance's foreign offices, or extend beyond that market to the region; and, domestic firms whose activities are largely restricted to the UK. The global client requires a global law firm with the capacity to provide a service which combines both international expertise and experience with local knowledge and cultural sensitivity. Hence, "from a management structure based largely on geography" Clifford Chance (1997a: 8) is going global, and avoiding the risk of over-specialisation by geographical area, by moving "towards a structure which places greater importance on the management of specific clients and products on an international basis across the firm".

Organization to Reduce Risk. The more global the law firm is the better prepared it will be to weather fluctuations in both the UK and world-economy. Despite the increasing interdependence of the world's economies globalizing is still a way of spreading risk and grasping opportunities should business and/or uncertainty decline or grow in a (or several) market(s). Two examples illustrate this point. First, after Tiananmen Square several US law firms closed, but reopened in 1993 to service an influx of investment banks (Rice 1998a). Second, the major financial crisis of 1997-98 in Pacific Asia, will cause the market for some legal work there to shrink. Hence, in Hong Kong inflexible international law offices (lacking variety in practice areas and clients) are facing an uncertain future but globalizing law firms will be vulnerable only in terms of the relative importance of this regional practice to their overall business.

Competitive Forces. To aim to be a global law firm, although perhaps driven by a fear of being left behind, provides a clear vision for future growth and development. For example, Clifford Chance's (1997a), Mission Statement entitled "A Vision for the Future", clearly states the firm's ten year plan to move on from being "the leading European-based international law firm" to be "The World's Premier Law Firm" (see also Daniels, 1993: 56-7). Thus, the ambition is to overtake the US giant Baker & McKenzie which was ranked first in the International Financial Law Review's 1998 list of the world's largest law firms. Clifford Chance is currently in second place ahead of Jones Day, Reavis & Pogue the second largest US law firm.

Merger Activity and Accountancy Firms. As well as competition from the expansion of US law firms, the globalization of London law firms is being driven by competition from European law firms who are strengthening through mergers and alliances, and from, above all, major accountancy firms who are adding legal services to their repertoire of professional services as part of their globalizing strategies (see Trubek et al., 1994: 434-435). Three of the accountancy giants Price Waterhouse (PW), Coopers & Lybrand ⁴, and Arthur Andersen have been busy building their legal networks through establishing and acquiring regional and national law firms in a determined attempt to capture a significant share of a market hitherto reserved to London's law firms. However, because the Law Society (the regulator) prohibits multi-discipline practices (MDPs) this has had to be achieved in the UK through 'sponsoring' an independent law firm. PW's ‘sponsors' the law firm Arnheim & Co. which, as a consequence, is expected to grow dramatically in the next few years from 20 lawyers presently to circa 300 (Darnill, 1997: 40). Following PW and Arthur Andersen (who sponsors Garretts), Coopers & Lybrand opened the associated UK legal practice Tite & Lewis in May 1997, and Ernst & Young and KPMG are also planning to open, or link to, associated legal practices in the UK. Arthur Andersen is now the fastest growing UK law firm and is establishing a presence in several European countries such as Spain where it recently took over the top Madrid based law firm J&A Garrigues (Anon, 1996: 112). The aim of these accountancy firms is to become all-in-one global professional one-stop-shop service firms servicing international clients for everything from accountancy to management consultancy and legal advice. Their threat to law firms is considerable because they have stronger capital and client bases combined with better geographical presence.

The competition between London and New York law firms and the increasing threat of the big accountancy firms has led to speculation about trans-atlantic mergers. An indicator of the increasing competition between UK and US firms has been the increasing globalization of the legal labour market as firms fight to secure the expertise of top lawyers to usurp their competitors. One example is given in The Economist (Anon, 1996: 109) which notes that "four senior British solicitors, specialists in project finance" were hired as partners by Shearman & Sterling (the fourth largest New York law firm as ranked by the New York Law Journal, 30/9/97), to bolster its London office through offering expertise in English law. Another recent example was the recruitment by Clifford Chance of a senior US lawyer from Sullivan & Cromwell (the 8th largest New York law firm) to enhance its rapidly developing US securities law capability. The appointment was the seventh US securities lawyer to join Clifford Chance's London office adding to the firm's global US law capability of over 40 US lawyers in New York, London, and Hong Kong (Clifford Chance, press release, 1997b).

Technological Advances. Technological advances in new methods of communication has aided and allowed the globalization (the integration of offices, practices, and people firmwide) of law services. Firms have developed intranets as an internal notice board, to facilitate rapid desktop delivery of information to fee-earners and the firm world-wide, and as an efficient means to deliver services and information to closed groups of customers. Furthermore, they have also taken advantage of the latest technology to better service clients and attract business. For example, Allen & Overy (1996) have added (despite issues about security and reliability of delivery) electronic mail, electronic document transfer, internet web pages, and videoconferencing services to their 24 hour telephone (switchboard and DDI), voice-mail, telephone-conferencing, fax, and DX (Document Exchange scheme) services. When doing business in the Asia-Pacific some of the new technologies are an added aid because they can provide cultural sensitivity acting as a "buffer" - providing time for reflection and understanding before responding - and so saving "face".

Europe and EMU. EMU, along with global restructuring in general, is driving the globalization of law with UK and US law firms extending and expanding their presence in the EU. This tendency has speeded up in recent years with Allen & Overy and Simmons & Simmons merging in 1997 with Italian firms Brosio Caseti of Rome and Grippo e Associati of Milan, respectively (also see Flood 1995, 155). In 1998 Freshfields announced that it is building up it's presence in Frankfurt by merging with Deringer Tessin Herrmann & Sedemund one of the city's leading legal practices with top clients including the German government's EU legal matters. With Allen & Overy also seeking a merger in Germany to expand its Frankfurt office these firms are just the crest of a wave of international law and accountancy firms who are contemplating expanding in and into Germany in preparation for EMU and the opening in Frankfurt of the European Central Bank in 1999. Firms are moving in for three main reasons. (1) To beat the competition, as Alan Peck (chief executive of Freshfields) observes, "To be a main player, you have to be in Germany as well as the other key cities. The Americans see this logic, and are ready to pile in to Europe, so we have to get there first" (see Rice, 1998b). (2) To profit from the lucrative German legal services market through the advantage of being a global firm. One of the main reasons Deringer is merging is because of Freshfields extensive global presence. The restructuring of Germany's legal services industry is necessary because of the need to not only satisfy the clients' need for international advice, but also to improve the international competitiveness of German firms. German companies have, as Frank Montag (a Deringer Partner) says, "gone a long way to becoming international operations" consequently "their legal advisers have to go the same route" (quoted in Yuille, 1998: 20). (3) After a wave of domestic mergers following liberalisation 8 years ago Germany's firms have become more receptive to international mergers and alliances because of their need to follow the example of Germany's accountancy firms and investment banks who have globalized to service their clients.

In summary, although this list of globalization drivers is not exhaustive many of them are common to the globalization of advanced producer services in general. The legal profession has, therefore, been responding to supply and demand forces which reward firms which 'go global'. However, the manner in which this globalization occurs, the 'global practice', is particular to law as a producer service.

Forms of Global Practice by London Law Firms

All but the last of London's Top 30 law firms have a "global presence" (Table 1) of some description. The firms follow either a strategy of direct presence (through opening overseas offices), a strategy of indirect presence (through negotiating affiliations and/or associations with foreign firms), or a combination of both. In addition some firms may use ad hoc arrangements to service their clients in smaller foreign national markets ⁵. These forms of global practice will be considered in turn.

Direct Presence. All but one of London's top thirty law firms have overseas offices which afford them a "direct presence" in a foreign jurisdiction (Table 1). We will illustrate this form of global practice by focusing on Freshfields, one of the law firms which relies solely on this strategy.

Freshfields has been established for over 250 years, is the fourth largest London law firm, and is the principal lawyer to the Bank of England and Lloyd's of London (the proposed merger with Deringer would move Freshfields up the rankings, but it would still be second to Clifford Chance). The firm has followed a strategy of "direct" rather than "indirect" presence to increase its geographical scope. Consequently, the firm has no associations or affiliations with firms which have a long-established presence in foreign markets, but does have 16 overseas offices covering a number of jurisdictions (Figure 1).

Freshfields has grown and has extended it's "direct presence" through the 1970s, 1980s and 1990s, however, the pace has dramatically quickened with demand in the late 1980s and 1990s with a new overseas office being opened virtually every year (out of circa 1,800 people in the firm in 1996/97, 600 work in offices other than London) ⁶. The firm's first overseas office was opened in Paris (1972), followed by New York (1977), Singapore (1980), Hong Kong (1985), Tokyo (1988), Brussels (1989), Frankfurt (1990), Madrid (1991), Moscow (1992), Bangkok (1994), Barcelona (1994), Hanoi (1994), Ho Chi Minh City (1995), Beijing (1996), Milan (1997), and Rome (1998). The firm's presence has clearly spread widely across both Europe and Asia, however, only one office has been established in the US so far perhaps due to the intensity of indigenous competition there.

Alan Peck, the Chief Executive of Freshfields, argues that a global strategy of "direct presence" is advantageous over "indirect" because it enables a firm to provide a standardized and consistent quality of service across the globe (Peck, 1997: 28). Anthony Salz (Senior Partner at Freshfields) argues that although there are considerable direct (staffing and office expenses) and opportunity costs (sending away good lawyers) in establishing a network of overseas offices it is necessary to be truly international, "I believe a firm must succeed in establishing a perspective across a number of countries with different cultures, different laws, and different approaches - and not simply a view of the world from head office" (1997: 3). The basic argument from Freshfields is that an "indirect presence" of affiliations and associations is not as effective as a "direct presence" in providing the local capabilities and knowledge necessary (along with the depth and diversity of the firm's experience across the world) to service a client's needs. Hence, Freshfields overseas offices are staffed by both local lawyers and lawyers from other jurisdictions (e.g. their Hong Kong office has 66 lawyers, 36 of which are locally qualified) enabling them to provide international experience with local knowledge (Chambers & Partners Directory, 1996-1997: 850).

In the case of project finance, for example, the overarching contract law (which will be in English or New York law and encompasses companies and banks from several countries) has to be squared with the local law system (which encompasses the local construction companies who build the actual project). This requires political and cultural sensitivity (especially in Asia) to local conditions as well as "the patience necessary to reassure governments and companies unfamiliar with Western lawyers" (Peck, 1997: 28). In short, overseas expansion through branch offices is not a case of planting flags around the world.

While the branch office extends the law firms global reach it is important that it is not an alien implant but is attuned to local conditions. Hence, as Figure 1 shows, the branch offices at Freshfields are not just occupied by "parachute lawyers" from head office, but are staffed by a mixture of both locally qualified and expatriate lawyers with the proportion of the former rising as the branch establishes itself. As law firms become more and more global the total number of expatriates should also fall to be replaced by local partners who can combine strength of local knowledge with global reach.

Indirect Presence. London law firms extend their global reach through an "indirect presence" which can take the form of either an affiliation with foreign firms (partnership or joint venture) or membership of an association (a looser organizational arrangement). In this more complex pattern of strategies we use four law firms to illustrate forms of globalizing. As mentioned previously, most indirect strategies are combined with direct presences. We begin with Lawrence Graham which, but for an office in Mariupol, relies solely upon an association. For the more usual combination of association with direct presence we discuss Taylor Joynson Garrett. For affiliations we consider Allen and Overy and Denton Hall, both of which combine direct and indirect presences as part of their overall strategy.

Lawrence Graham (Ranked 28 (Table 1) has a minimal "direct presence", but does have an "indirect" European presence through it's membership of the Associated Business Lawyers of Europe (ABLE) which was formed (with firms in Belgium (Brussels), France (Paris), Germany (Hamburg), Spain (Madrid) and Sweden (Stockholm)) to serve those clients expanding into Europe with legal services. What is interesting about associations such as this one is the role of culture, networks, and personal relationships in getting business done. Richardson (1996: 9) highlights the fragile and intangible nature of this approach to providing legal services abroad,

"Successful associations are not easy to build and require continuous work if they are to be more than correspondent relationships. Their success is dependent on the development of trust between the partners in both firms and among the professional staffs. Usually it is a relatively small number of partners in either firm who are the driving force in achieving the right relationship. Unless their enthusiasm permeates both firms the real benefits which can grow from a successful association will not be reaped."

Richardson also emphazises the need for regular face-to-face meetings, exchange between membership firms of expertise and staff, and the importance of joint initiatives in areas such as marketing for an association to work.

Taylor Joynson Garrett (Ranked 17) is an example of a London law firm which follows a combination of both "direct" (with offices in Brussels and Bucharest) and "indirect" presence (having affiliations and being a member of an association) to form an international network. The firm is both a member of Interlex, a non-exclusive informal association (founded in 1973) of independent law firms in over 20 countries which work collectively to provide a complete range of international legal and business services to a variety of clients; and, has "international affiliations" with several leading foreign law firms to form an international group of over 1200 lawyers and 72 offices (Figure 2),

"The firms co-operate in representing clients with multinational business interests from all the main economic areas in the world. We recommend each other as counsel of choice although, naturally, clients can make their own selection if they prefer. There are frequent exchanges of personnel and a number of world-wide practice groups have been formed which meet regularly to discuss legal and business developments in the various jurisdictions ... The affiliations give us the ability to provide our clients with a focused and consistent service, involving local lawyers with proven experience" (Taylor Joynson Garrett, 1997: 3).

The firm, therefore, extends its geographical presence in North America (working with the US firm Graham & James L.L.P. which maintains a London office to co-ordinate its activities with Taylor Joynson Garrett and has domestic offices in Los Angeles, New York, San Francisco, and Washington), in the Far East and Australia (working with Deacons Graham & James with offices in China, Japan, Hong Kong, and Thailand), and elsewhere with further representation through the network in Indonesia, Taiwan and Vietnam as well as Kuwait and Saudi Arabia in the Middle East, and in Europe, the Czech Republic as well as the Graham and James' Italian office in Milan.

Allen & Overy (founded in 1930) is the third largest London law firm with an extensive network of 18 overseas offices in Europe, Asia and North America. However, complimenting this Allen & Overy also has a strategic affiliation (established in 1991) with the two leading continental firms Gide Loyrette Nouel in France, and Loeff Claeys Verbeke in the Benelux countries which serves to further extend Allen & Overy's global presence into two of Europe's leading legal markets. The affiliation between these three international firms, gives clients access to 1500 lawyers in 41 offices a 1/3 of which are located outside of Europe (Allen & Overy, 1997), and enables (through integrated teams, joint practice groups, exchange lawyers, and joint presentations and papers) Allen & Overy to provide a full range of legal services on cross-border transactions and international disputes by taking advantage of local law expertise.

Denton Hall is the twelfth largest London based law firm and also has a considerable "direct presence" (7 offices in three continents). However, this firm is also the founding member of an affiliation of leading European law practices (from Barcelona, Berlin, Chemnitz, Cologne, Copenhagen, Düsseldorf, Frankfurt, Hamburg, Madrid, Munich, Oslo, Paris, Vienna) called the Denton International Group of Law Firms which serves to increase Denton Hall's European presence. Founded in 1991, and co-ordinated from London, the affiliation brings together firms, who remain autonomous and practice under their own names, to "work together on assignments for international clients from within and outside Europe, on cross-border transactions and on projects for international agencies" (Denton Hall, 1997: 6).

Ad hoc Presence. In addition to these two dominant forms of presence there is another type which can be classified as "ad hoc presence". This is where a firm does business in an overseas market but does not have a representative presence there. For example, the London law firm Freshfields works with local law firms in parts of the world where they do not have a "direct presence": in India, Indonesia, the Philippines and to a lesser extent throughout Central Europe and the Middle East.

In summary, both "Direct" and "Indirect" presence are two ways of straddling the world to compete for legal work on a global scale. The fact that most firms combine these strategies suggests that neither has yet established itself as the dominant form of globalizing. The jury is still out as to which is the most cost effective way to achieve ones global ambitions, but given the fact that the balance towards "direct presence" seems to be greater among larger firms (Table 1) we might expect this strategy to become more important in the future. It is certainly the case that the direct (including IT, staff, training, extra management and marketing) and opportunity (sending able expatriate lawyers away) costs of establishing a "direct presence" (global-local practices) are considerable as opposed to those of forming an association, however, the advantages (including the fact that clients are attracted by having the same standard of legal advice wherever they are and by geographical proximity wanting direct local access to their lawyers) of being directly present in foreign markets perhaps outweighs the cost. What is clear is that both means of establishing a "presence" must balance international expertise with local knowledge.

AN ANALYSIS OF LONDON LAW FIRMS IN GLOBALIZATION ARENAS ⁷

The cluster of contemporary processes which have come under the heading globalization are very uneven in their geographical distribution: it has recently been described as 'uneven in terms of cross-national intensity, geographical scope, and national and local depth' (Holm and Sorensen, 1995: 1). Hence despite the sense of universality which the term evokes, in practice many globalization processes have been concentrated in a few zones of the world-economy largely by-passing many world regions. As will have been gathered from the last section, this is most certainly true of the global strategies of London law firms. In this section we specify this geographical unevenness through a series of simple data analyses which highlight what we call globalization arenas, the concentrations of global law firm activities.

Our analyses are all based upon data describing the strategy of "direct presence". Hence this analysis should be seen as partial, a picture of a particular globalization based upon one form of strategy. Behind the "direct presence" of firms the importance of "indirect presence" in the globalization of law should not be undervalued. Affiliations, associations, personal contacts, and networks are vital to the business of many of London's law firms across Asia, Europe, and the US. However, it is important to realize that, since "direct presence" does usually involve a greater commitment of resources than other strategies, by focusing on the presence of branch offices we do identify those cities in world regions where the workload can justify such an outlay. It is the geography of these branch offices, therefore, which illustrates most clearly the uneven development of globalization ⁸.

A Geography of Globalization

We present a London view of the geography of globalization by focusing on the largest thirty City law firms (Table 1). Between them, these firms have 221 foreign branches in 68 cities across the world. The 24 cities in which 10% or more of these firms have branches are ranked in Table 2. The most obvious feature of this table is the dominance of Brussels. Clearly this is a specific political effect; as the headquarters of the EU Commission and its bureaucracy Brussels is developing a role analogous to Washington, D.C. in attracting law firms⁹. However, our interest here is in the other 23 cities as indicators of the geography of globalization.

Six cities form a stratum of cities below Brussels and they represent four separate regions: Hong Kong, Singapore and Tokyo, are from Pacific Asia, and western Europe, northern America and eastern Europe are represented by Paris, New York and Moscow respectively. These four regions account for 89% of London's foreign offices and we will focus on them as the 'prime globalization arenas'. Despite their common attraction for London law firms, they differ greatly in two important ways: their trajectories to becoming globalization arenas and their levels of political centralization. Historically, two regions, northern America and western Europe, are long established bi-polar core segments of the world-economy. Pacific Asia is a mixture of new core and semi-periphery which emerged as a major region to rival the old core in the 1970s and 1980s. Eastern Europe has emerged as a globalization arena of the 1990s, it is a special case of acute semi-peripheral disruption consequent upon the demise of COMECON with the collapse of European communism. In terms of political centralization: Pacific Asia is the most fragmented consisting of more than a dozen states, whereas northern America is the most centralised dominated as it is by one state, the USA. Western Europe lies between these two cases with multiple states but an emerging strong regional polity, the EU. Eastern Europe was highly centralised but has moved decisively towards the fragmented end of the spectrum since 1989 and has evolved a pattern not unlike Pacific Asia.

London has 77 offices in 20 western European cities or, excluding Brussels, 52 branches in 19 cities. Remarkably, the latter statistic places western Europe second to Pacific Asia with its 63 offices in 11 cities. With a total of 140 offices in these two regions, they are by far the most important destinations for London law firms. However, they could hardly be more different. Western Europe can be considered London's 'home world region', Pacific Asia is the principal globalization arena for law firms. In western Europe there is concentration in the top four cities after Brussels in Table 2 (Paris, Frankfurt, Madrid, Milan) with each from one of the four largest national economies (France, Germany, Spain, Italy). However, in Pacific Asia the concentration is much greater in the 'big three', Hong Kong, Singapore and Tokyo, with only the latter, the weakest case, linked into a national economy. With two 'city states', Pacific Asia perhaps epitomises the future potential of globalization: increased economic integration accompanied by increased political fragmentation which is exactly what the EU is striving to prevent.

London law firms have 31 offices in 10 cities in eastern Europe and 23 offices in 11 cities in northern America. The latter figures are perhaps a surprise: why not more offices in the most prosperous section of the world-economy core? Furthermore the pattern of northern American offices is the most concentrated of all with only one city, New York, featuring as a major location. We deal with this question of London and northern America in detail below. Eastern Europe is more like the other two regions with four major cities, Moscow, Warsaw, Prague and Budapest, each servicing the four largest national economies, Russia, Poland, Czech Republic, Hungary, although perhaps acting more like 'city states' in their abandonment of hinterlands, especially in the former USSR.

To summarise, we can provisionally identify four globalization arenas: (i) western Europe is London's home region with the widest dispersal of offices; (ii) Pacific Asia is the principle globalization arena: (iii) eastern Europe is the secondary globalization arena; and (iv) northern America is a globalization arena focused on a single city.

In and Out of London

In order to evaluate London's role in the globalization of law we need to look at foreign firms who have branch offices in London. There are a total of 129 foreign law firms with branches in London compared with the 221 foreign branches of London's top thirty firms¹⁰. The fact that there are many more London branches in other cities than foreign branches in London may be viewed as an indicator of London's importance as a global law centre but the situation is much more complicated than this overall picture suggests.

There are 16 cities whose law firms have three or more branches in London (Table 3). The most obvious feature of this table is the extreme dominance of New York which contrasts sharply with the pattern of London's offices abroad, where New York is important, but is merely one of six 'second tier' cities (Table 2). This In-Out contrast extends to other northern American cities which were conspicuous by their absence (except for Washington, DC) in Table 2 but here occupy all the top ranks and constitute just under half the cities represented. However, perhaps even more remarkable is the fact that there are no Pacific Asian (or eastern European) cities in London. Putting these facts together provides us with a different view of how the globalization arenas are integrated into the world-economy in terms of the globalization of law.

A comparison of foreign law offices in London with London offices abroad in terms of the globalization arenas indicates that the newer globalization arenas have not developed a global law sector and are, therefore, receivers of global legal services (Table 4). Northern America appears as the arena with the strongest global law sector penetrating London in a way that London does not reciprocate (see Table 2). Although western Europe and, interestingly, the rest of the world category, have less law firm branches in London than vice versa, they do have some global law presence. In fact, it can be shown that London operates as an articulator for some other cities who have branches in London but are not themselves important enough players in the world-economy to attract London law firms. Two such categories can be easily illustrated (Table 5). First, London acts as a centre for European cities outside the four main national economies, for instance, Copenhagen, Dublin and Oslo (see Table 3). This regional articulator role extends beyond these three cities (see Table 5). Second, London has kept some of its imperial links in much the same way, for instance Toronto, Johannesburg and Sydney (see Table 3). Again Table 5 shows a very stark pattern, almost a one-way street into London ¹¹.

To summarise, we can see that by adding the presence of foreign law firms in London, a somewhat more complicated picture emerges than the simple geography of London law firm overseas offices. As well as the special cases of cities in small European states and former colonial cities, there is clear evidence of northern America's importance in global law relative to London. To put London's law firms into a more comprehensive perspective requires a preliminary comparison with their main global rivals, New York law firms.

London versus New York

In order to compare London with New York we focus on the top thirty law firms by size in the following discussion. Hence Table 6 is constructed on the same basis as Table 2 making them directly equivalent. Overall New York's top thirty firms have 138 foreign branches in 35 cities compared to London's 221 in 69 cities. This smaller and more concentrated pattern is reflected in Table 6.

The most obvious contrast between the lists of cities with London and New York law firm branches (Tables 2 and 6) is the relative numbers, London's 24 compared with New York's 12. This is partly accounted for by the nature of the two cities' home arenas - New York's more politically unified home means that large numbers of its branches and people (see Warf, 1991: 255) in other world cities remain within the USA and therefore are not recorded here. For instance, London law firm branches in Brussels are recorded, New York law firm branches in Washington, DC are not. Nevertheless this does not account for all the differences, it is definitely the case that overall large London law firms have a broader global reach than their New York counterparts. The main practical reason is the size of the USA's market for legal services which makes foreign investment relatively less attractive. Furthermore, this market is a non-competitive arena in terms of foreign global law firms. London has its New York 'toe-hold' here but New York is big in four western European cities, Paris, Brussels and Frankfurt as well as London. Hence with its more fragmented political structure, western Europe is a competitive global arena in the way northern America is not.

The similarities between Tables 2 and 6 should not be overlooked however. In terms of attracting foreign law firms, the top seven cities (substituting London for New York in each table) are the same, except that for New York, Frankfurt joins Moscow at the bottom of this elite city stratum. Furthermore all the remaining cities in New York's list appear in approximately the same location in London's longer list. In addition 92% of New York law firms foreign branches are in the four globalization arenas (compared to 89% for London) with 53 offices in 9 cities in western Europe, 51 cities in 8 cities in Pacific Asia, 22 offices in 7 cities in eastern Europe plus one office in Toronto, the only northern American city in the data to qualify as foreign. We can infer from this that our original regional division identifying four globalization arenas for law firms to be more general than just a London-based strategy.

Our overall conclusion from all our data analysis is as follows: (i) there are four globalization arenas which dominate global law firm strategies; (ii) western Europe is a competitive globalization arena, within its home region London has a greater presence than New York, and it also operates as global gateway to other European cities; (iii) northern America is a non-competitive globalization arena with New York having a gateway function for a relatively small London direct presence; (iv) Pacific Asia is the principle open globalization arena in which foreign law firms compete with London having a greater direct presence than New York; (v) eastern Europe is the secondary open globalization arena in which foreign law firms compete with London again having a greater direct presence than New York; (v) the rest of the world is relatively unimportant to global law firms although London does operate as a centre for some former British colonial cities.

CONCLUSIONS

The study of law firms has been relatively neglected in producer service and world city research, but this Cinderella role should not be taken to indicate that this sector is any less susceptable to the attractions of a global market than other producer services. Law is distinctive from other services in being fragmented into different jurisdictions with several major and distinct regional traditions (see, for example, Wood, 1997), but this has certainly not prevented the globalization of law proceeding in a manner similar to other producer services. These similarities were highlighted in our discussions of why this globalization was taking place. The particular needs of law in terms of local expertise were highlighted in our discussions of how this globalization operated, with even the 'less sensitive' direct presence normally involving local lawyers as partners. It is when we come to answering the where of globalizing tendencies in terms of major London law firms that we produce specific results which require confirmation from other service sectors. The very specific uneven globalization that we have identified is in line with much thinking on globalization but has not been empirically illustrated in this way before.

In this paper we have just scratched the surface of the complex globalization of London's law firms. Our study is limited and provisional and should serve as a seed-corn for further studies on the globalization of law and law firms in general. The directions for further research generated from this paper , as we see them, are for: (1) more studies which utilize relational data to better integrate producer service and world city analyses so that economic processes and geographical outcomes can be seen as a single global phenomenon; (2) more studies on both the competitive context in the supply of legal services and the reasons for the rise of the patterns of demand (i.e. distinctive arenas of globalization) for legal services which we have identified; (3) more studies on the links between post-Fordism and the globalization of law and law firms (also see Coffey & Bailly, 1992; Wood, 1991), or in other words, on the shift from "Cravathism" (Trubek et al., 1994: 423) to post-Cravathism; and, (4) more studies on how the geographies resulting from the globalization of the provision of legal services are linked to the patterns of globalization followed by other producer services such as accountancy and banking.

ACKNOWLEDGEMENTS

We would like to thank the Economic and Social Research Council (R000222050). Thanks also to three anonymous referees, Marcus Doel for suggesting the title, and Gordon Clark for his insightful comments on the first draft.

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1 In 1991 Daniels' (page, 359) argued that service industries in general had "long been the Cinderella of economic and urban geography".

2 Healey & Baker's "European Cities Monitor: Europe's Top Cities" (1997 Edition), which interviews senior executives from more than 500 European companies for their attitudes towards Europe's leading business locations, found that London is considered to be the fourth best city in terms of the quality of life for employees (behind Barcelona, Paris, and Geneva). Furthermore, according to a ranking by Precourt & Faircloth in Fortune (1996), who created a list of the "Best Cities for Work and Family", London is the 2nd best international (i.e. non-US) city (behind Toronto and ahead of Singapore, Paris and Hong Kong).

3 This list does not purport to be exhaustive. Several other 'drivers' could also be included such as the general worldwide deregulation and liberalisation of the trade in services which has encouraged the globalization of not just law, but business and professional services in general. Indeed, Trubek et al. (1994: 409-410) lists several "international forces" promoting the globalization of law and the need for expertise in international law: Changing production patterns (i.e. flexibility and the 'global factory'); Linked financial markets; The increased importance and power of 'footloose' multinational firms; The increased importance of international trade and the growth of regional trading blocs (EU, NAFTA, etc.); Structural adjustment and privatization; The hegemony of neo-liberal concepts of economic relations promoted by the IMF, the World Bank, and GATT; A worldwide trend towards democratization, protection of human rights, and renewed interest in "The Rule of Law"; and, the emergence of supranational and transnational actors promoting human rights and democracy. (Also see Dicken, 1986).

4 On the 1^st of July 1998 Price Waterhouse and Coopers & Lybrand merged to form PricewaterhouseCoopers (PCw). This reduction of the 'Big Six' to the 'Big 5' continues the historical trend of increasing concentration in this sector. The concentration (from 8 to 6 to 5) follow's Marx's observation that there is a trend toward monopoly or oligopoly in capitalism. At the time of writing the rumour circulating the City was that in the future a merger between Deloitte Touche Tohmatsu International and Arthur Andersen was likely (personal source). However, one has to remember that in 1989 (see Waller, 1989) the attempt by Price Waterhouse and Arthur Andersen "to merge into the largest accounting firm in the world with 4,642 partners and annual revenues of $5,038 billion failed because of conflicts of interest over clients and, especially important, cultural differences in organization" (Flood, 1995:157).

5 Our schema adds to the four major ways law firms operate outside of their national boundaries as identified by Ascher (1993): first, as independent transnational corporations, for example, Clifford Chance and Freshfields (Daniels, 1993; Rice, 1990); second, through partnership arrangements with other (host-based) law firms such as Baden Oppenhoff (see Anon, 1998); third, through partnerships with non-host based law firms; and fourth, through loosely structured arrangements within ad hoc networks (Aharoni, 1993). This schema, however, does not include the role of international mergers or multinational partnerships as mechanisms to increase global presence (see Zach, 1995).

6 From May 1987 to May 1997 the number of Partners has increased from 61 to 185, Lawyers (including partners) from 265 to 701, Trainees & paralegals from 66 to 227, Total fee-earners from 331 to 928, Partners resident outside UK from 12 to 57, Lawyers resident outside UK (including Partners) from 39 to 261, Support staff from 364 to 843, and offices from 5 to 16 (Freshfields, 1997: 5).

7 Trubek et al. (1994) point to the creation of transnational arenas for legal practice in their study of law and global restructuring. However, they do not substantially elaborate on this beyond stating that, "The relative degree of 'internationalization' of different national fields is a major subject of inquiry" (p. 411). Their paper is excellent but concentrates on nation-states rather then cities, "the primary goal of this Paper is to analyze changes in the centrality of the normative order of nation-state law and nationally-oriented legal practices under the influence of transnational, supranational, and international legal regimes and orders ..."(page, 418).

8 When estimating the global presence of a law firm "direct presence" is a solid indicator of a firms geographical scope and commitment to providing a global service. Using only "indirect presence" as a measure would be questionable because one has to bear in mind that firms are keen to present an "international image" (international visibility, having an international presence on your notepaper, is a way to attract clients from both home and abroad). Indeed, Patrick Stewart (1991: 9) writes that when the words 'association' or 'affiliation' are used they often connote "much more than the true status of the relationship - usually non-exclusive arrangements backed up by a few joint projects and not much more than the hope of referrals". However, an important caveat when counting offices as a measure of "direct presence" is that one has to also be aware that, "Firms proudly announce the opening of each new office abroad ... though they are often more discreet about the contraction and closure of offices" (Abel, 1994: 738).

9 Brussels has the reputation of being the most overlawyered city in Europe (Budden, 1993: 11) which makes the parallel with Washington, DC so strong (also see Flood, 1995: 150-152). The reason that law firms want to be in Brussels is to be abreast of the legislative and economic integration of the EU. This is necessary to serve not only a client who operates in another member state, but also a client who only operates in the UK because that client is still subject to EC law. However, another reason is because clients expect an international law firm to have an EC practice and so firms seeking an international profile establish an office there whether it is viable or not.

10 Being derived from just the top 30 largest London law firms, this figure of 221 is an under-estimate of London total global presence in law. If the top 50 law firms are considered the figure rises to 279.

11 Note that in this case east and south east Asian cities, Hong Kong and Singapore, are not included despite their imperial origins because it is assumed more recent globalization processes dominate here.