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Young lawyers at top London firms are favouring roles advising on private equity deals over traditionally prestigious work for publicly listed companies as the rise of private capital and decline in stock exchange listings reshape the legal sector.
Trainees and newly qualified lawyers have been increasingly keen to join private equity teams at the UK’s “magic circle” law firms as they seek out the busiest practice areas, according to partners at the elite outfits.
The shift follows a rise of private capital alongside a decline in the number of companies listed in the UK since the financial crisis.
The trend accelerated last year as the London Stock Exchange suffered its worst year for departures since 2009, limiting the amount of equity capital markets work available to advisers.
“We do find there is a lack of interest in ECM these days — it has been eclipsed by private equity,” said Ria Karnik, a managing director at legal recruiter Major, Lindsey & Africa.
Partners at Clifford Chance said that private equity had become one of the most sought after parts of the firm for junior lawyers to seek a six-month stint during their two-year training contracts.
Trainees at the firm are given 200 “points” which they use to bid for “seats” in their favoured practice areas, with private equity now among those requiring the most points, the partners said. Clifford Chance declined to comment.
A partner at another “magic circle” firm said that private equity had been oversubscribed in recent trainee rotations.
Newly qualified associates are also keener on private equity compared with traditional ECM roles advising on company flotations and capital raisings, according to recruiters.
“The lack of ECM activity, and natural attrition of talent, is resulting in the slow drip-drip loss of ECM expertise — in the legal sector, and elsewhere,” said James Roe, UK ECM co-lead at “magic circle” firm A&O Shearman.
“This, coupled with firms’ strategic focuses on private capital, is likely impacting the desire of junior lawyers to do ECM-related work.”
A busy period for private equity and lack of stock market flotations in recent years have driven the disruption in the London legal market.
US-founded firms, such as Kirkland & Ellis and Paul, Weiss, Rifkind, Wharton & Garrison, have used their relationships with the biggest private equity houses to expand in the UK.
Karnik said the growing influence of US firms, which have a strong private equity focus, seemed to be encouraging junior associates to move into the practice area. The shift had been compounded by a lack of ECM associate recruitment in the past two to three years, she added.
At the senior end of the sector, US firms have used their deep pockets to poach partners from UK rivals leading to the largest number of partner hires in the industry last year since at least 2007.
Total annual ECM activity in London, involving both initial public offerings and secondary offerings, has fallen 56 per cent to $31.5bn in the 10 years to 2024, according Dealogic data. Despite a slight recovery since 2022, activity remains well below the levels seen before the Covid-19 pandemic.
In contrast, private equity-related M&A activity in the UK exceeded $102bn last year, the fourth-highest on record.
“ECM just hasn’t been as busy. But that may change as private equity offload their investments into the public markets,” said Chris Clark, a director at London-based legal recruiter Definitum Search.
