This week’s Session on 26th March 2025

Introducing something new this week, Greg Jackson, Director at PwC, joined Founder Patricia Gannon to run through some of the main legal stories emerging from the US and the UK. He shared valuable insights into significant developments in legal news this week. From political pressures on major law firms in the US to record-breaking financial results and evolving workplace policies, the conversation covered some critical issues that legal professionals should keep an eye on.

Political Pressure on U.S. Law Firms

The first story we covered was the targeting of specific US law firms by the Trump administration through executive orders focused on DEI programs. Three prominent firms—Covington, Perkins Coie, and Paul Weiss—have found themselves at the center of this controversy.

Jackson suggested this represents a new form of “lawfare,” as the administration turns “the organ of the state” against organisations perceived to have created obstacles to its agenda. This raises serious questions for firm management: “If you are a really high-quality firm in the U.S., are you thinking at this point you want to do anything that confronts the Trump administration or Trump individual in any way, shape or form?”

The resulting “chilling effect” could significantly impact how firms approach politically sensitive matters. While industry bodies like the IBA have condemned these actions, individual firms have been notably reluctant to take public stands—perhaps reflecting the traditionally risk-averse nature of law firm management when it comes to political positioning.

This situation has highlighted a potential vulnerability for law firms that have historically “operated under the radar, and most people have no idea who any of these law firms are,” as Jackson put it. This crisis demonstrates how quickly reputational damage can escalate, raising questions about firms’ preparedness for crisis communications and reputation management.

Source: The Hill

Record-Breaking Financial Results

On a more positive note, recent financial reports from major U.S. firms showcase extraordinary growth. Kirkland & Ellis grew its revenue by 22% to nearly $9 billion—adding approximately $1.5 billion in a single year, roughly equivalent to the entire revenue of large UK firms like Clyde & Co.

Other impressive results include White & Case (revenue up 12.5%) and Latham & Watkins (revenue up 23% to $7 billion). Partner profits at Kirkland reached $9.3 million, reflecting the firm’s continued dominance.

Jackson attributed this success to several factors: “Kirkland and Latham have had super clear strategy, what they do, how they do it, very focused.” He also noted they’ve been “less encumbered by complex global platforms” with Kirkland still generating over 80% of its income from the U.S.

This concentrated approach has created a virtuous cycle: “Once you start to get scale, it creates more and more compounding of scale.” With a profit pool of this magnitude, these firms can make strategic investments almost anywhere they choose, increasing pressure on competitors worldwide.

A striking example of this financial power came in a recent Bloomberg report revealing that Blackstone had paid Kirkland $100 million in legal fees—more than double their previous filing of about $41 million.

Associate Compensation and Retention

The financial success of top firms has translated into significant compensation for associates. Jackson noted that under the Cravath/Milbank scale, bonuses for the class of 2017 reached $115,000, with special bonuses of approximately $25,000 bringing the total potential bonus to $140,000 “on top of a very generous salary.”

This compensation reflects the intense demands placed on associates, but Jackson challenged the notion that high-performance environments must come at the expense of culture: “You can have an extremely busy, highly productive team, but have an amazing culture too.”

However, he raised concerns about the “transactionality” these compensation structures create between individuals and their firms. With average tenure declining—some report associates now staying just two to three years at firms—Jackson suggested more innovative approaches might be needed: “How do firms create more stickiness… much like corporates do? LTIP schemes, vested shares in a way which is really different to how they currently remunerate and look after their people.”

With firm-wide turnover typically between 15-20%, this creates significant challenges for building collaboration, client relationships, and organisational culture.

Return to Office Policies

The ongoing tension between remote work and office attendance has prompted new approaches from firms. Allen & Overy has linked associate bonuses to office attendance, with an expectation of being in the office 60% of the time.

This reflects broader industry concerns about mentorship, training, and culture-building in hybrid environments. Jackson noted that PwC similarly expects people to be in three days a week, either on client site or in the office.

The fundamental challenge centers on balancing flexibility with the learning that happens through in-person interaction: “Can people learn as much by osmosis in that methodology as they would being around each other?”

Jackson acknowledged the complexity of this issue, noting that legal work involves both collaborative elements that benefit from in-person interaction and focused drafting tasks where some individuals may work more productively from home. He suggested the key is developing “judgment” about which approach is appropriate for different tasks.

As firms struggle to increase office attendance, Jackson observed they typically rely on three levers: “controls, incentives and/or sanctions, or transparency.” Having tried incentives with mixed success, more firms appear to be moving toward more explicit requirements.

Source: The Lawyer

Shifting Market Positioning

Jackson also highlighted Shoosmiths’ recent announcement about chargeable hours targets and bonuses as part of a broader strategy to reposition the firm in a different market segment.

This approach demonstrates that firms can pursue higher performance standards while maintaining their cultural identity: “You can have high performance and high chargeable hours, but still maintain great culture.”

For firms looking to elevate their market position, this balanced approach may provide a template for combining ambitious growth targets with distinctive cultural values.

Looking Ahead

As these developments unfold, legal professionals at all levels should consider their implications. The political targeting of firms highlights the need for robust crisis management planning. The financial results of leading firms demonstrate the power of focused strategy and scale. Compensation and retention challenges call for innovative approaches to creating more sustainable career paths. And workplace policies continue to evolve as firms seek the optimal balance between flexibility and collaboration.

Throughout these changes, the fundamental question remains how firms can maintain their core values and distinctive cultures while adapting to rapidly changing market conditions. As Jackson concluded, the challenge is: “How do we move our market position, but we don’t want to lose who we are?”