"Magic Circle" is an informal term describing the five most prestigious London-headquartered multinational law firms, which generally outperform the rest of the London law firms in profitability. The term has also been used to describe the most prestigious barristers' chambers in London. All of the 'Magic Circle' law firms and barristers' chambers specialise primarily in corporate law.

History and evolution

thumb|[[A&O Shearman, Freshfields and Linklaters are headquartered in the City of London. Slaughter & May's headquarters lie just outside the boundary of the City, in the Borough of Islington.]]

The term was coined by legal reporters in the 1990s and is generally considered to include the following five law firms: A&O Shearman, Clifford Chance, Freshfields, Linklaters, and Slaughter and May.

thumb|[[Clifford Chance is headquartered in Canary Wharf.]]

The Magic Circle has been termed a "journalistic device, coined by legal reporters in the wake of the break-up of its predecessor, the 'Club of Nine'". At the time, these firms were Allen & Overy, Clifford Chance, Freshfields, Linklaters, and Slaughter and May.

In 2004, Slaughter and May's then senior partner, Tim Clark, said: "It's a funny concept. I don't know where the term came from or who founded it. It's mainly something that comes up when we talk to journalists or they talk to us. We don't describe ourselves as a Magic Circle firm in any of our marketing material." In 2017 The Lawyer magazine stated that it no longer considered Slaughter and May to form part of the Magic Circle due to its lower revenues and UK domestic focus. Nonetheless, other commentators still consider Slaughter and May to be a member of the Magic Circle.

Best firms included

Among the large firms included in the term are Herbert Smith Freehills, Hogan Lovells, Norton Rose Fulbright and Stephenson Harwood, which are less profitable.

Also, at the time the term was coined, the corporate practice at Herbert Smith (as it was known pre-merger) was focused on privatisation work, which had dried up. Arguably for this reason, it was not included in the initial Magic Circle. These firms have a lower turnover than the members of the Magic Circle, but consistently have an average profits per equity partner (PEP) and average revenue per lawyer (RPL) far above the UK average (and, in some instances, higher than members of the Magic Circle). Contrary to what the term Silver Circle may suggest, there is no Golden Circle.

In 2013, The Lawyer argued that the term Magic Circle would lose its relevance, becoming "outmoded": "It will remain an easy shorthand to denote the UK-heritage firms with the biggest revenues, the most international work and which consistently outperform the rest of the [UK] market on profitability." It was argued that by 2023 global law firms would rather be split between the Global Elite law firms, International Business law firms and Super Boutique law firms.

The Global Elite law firms compriseCleary Gottlieb Steen & Hamilton; Davis Polk & Wardwell; Kirkland & Ellis; White & Case; Latham & Watkins; Simpson Thacher & Bartlett; Skadden, Arps, Slate, Meagher & Flom; Sidley Austin; and Weil, Gotshal & Manges.

The International Business law firms comprise CMS; Ashurst; Baker McKenzie; DLA Piper; Hogan Lovells; Jones Day; King & Wood Mallesons and Norton Rose Fulbright.

The Super Boutique law firms comprise Cravath, Swaine & Moore; Sullivan & Cromwell; Paul, Weiss, Rifkind, Wharton & Garrison; Slaughter and May; and Wachtell, Lipton, Rosen & Katz. Similarly, in 2014, Linklaters' then managing partner, Simon Davies, said "The Magic Circle isn't what it used to be in the context of the US market or any market. I don't think it's going to gain power or momentum and I don't think it's a strengthening brand in itself," and "At the end of the day we see ourselves as one of the leading global law firms, not one of the leading Magic Circle firms".

Barristers' chambers

The following barristers' chambers in the United Kingdom are occasionally, by analogy, described by commentators as the Bar's Magic Circle:

  • Big Three law firms, an informal term for leading law firms in New Zealand.
  • Big Four law firms, an informal term for leading law firms in Japan.
  • Big Five law firms, an informal term for leading law firms in South Africa.
  • Big Six law firms, an informal term for leading law firms in Australia. In 2012, three of these firms merged with overseas firms, and one other began operating in association with an overseas firm. As a consequence, it has been proposed that the term is no longer applicable to the Australian legal profession, displaced by the concept of Global Elite law firms or International Business law firms.
  • Offshore magic circle, an informal term for leading law firms in offshore financial centers.
  • Red Circle law firms, an informal term for leading law firms in the People's Republic of China coined by The Lawyer magazine in 2014. For further information, see also the list of the largest Chinese law firms.
  • Seven Sisters law firms, a collection of seven leading Canadian law firms with offices in Toronto.
  • White Shoe law firms, an informal term for leading law firms in the United States.

See also

  • Big Four accounting firms
  • Big Three (management consultancies)

References