In 1988 Nigel Knowles was a lawyer working for Broomheads & Neals, a small Sheffield-based firm, when it merged with a Leeds-based practice, Dibb Lupton. In little more than two decades since, he has helped to turn the business — DLA Piper — into the world’s biggest law firm by revenue.

Defying the turmoil in the legal market, it has overtaken its blue-chip Wall Street and City rivals by increasing full-year fee income by 6 per cent to $2.26 billion, according to figures published today.

Legal Business, a trade magazine, ranks DLA Piper at the top of its annual survey of the world’s 50 biggest law firms, ahead of Linklaters ($2.23 billion), Freshfields Bruckhaus Deringer ($2.22 billion) and Skadden, Arps, Slate, Meagher & Flom ($2.2 billion). Clifford Chance, which had fee income of $2.19 billion, slumped to sixth after a decade as the world’s biggest law firm.

DLA Piper’s rise is astonishing for a firm of such humble origin, according to Jim Baxter, editor of Legal Business. “When the concept of the global law firm really took off a decade ago, none of DLA’s constituent parts were even in the top 50, let alone near the summit.”

It also caps an extraordinary year for Sir Nigel Knowles, DLA Piper’s co-chief executive. He was knighted in March — one of the few times that a practising solicitor has been awarded the honour.

The son of a grocer from Stocksbridge, a steel town in South Yorkshire, Sir Nigel led a group of similarly ambitious younger partners. They completed a rapid succession of mergers across the UK and into Europe and Asia before pulling off the biggest law firm marriage in history: a three-way tie-up with Piper Rudnick and Gray, Cary, Ware & Freidenrich, two American firms.

Now run jointly by Sir Nigel, in London, and Lee Miller, in Chicago, DLA Piper has almost 4,000 lawyers in 29 countries, including a significant presence in the Middle East, China and much of the former Soviet Union. Its clients include multinationals such as Barclays, Hewlett-Packard and Royal Bank of Scotland, while it has also established clout in Washington: George Mitchell, its former chairman, was picked by President Obama to be his envoy to the Middle East.

Sir Nigel told The Times that the firm had benefited last year from the financial crisis as large clients looked for a cheaper alternative to the top Wall Street and City firms.

Unlike rivals such as Linklaters, which concentrate on high-value transactions and have cut loose less profitable practices, DLA Piper has sought to win clients by performing a vast range of high-volume, low-margin commercial work. Its profit margin last year, at 24 per cent, was half that of Freshfields or Slaughter and May.

Sir Nigel said: “We’re in a great space because of our diversity. We do everything you can think of and we’ve actually benefited from not being in a niche. We’re purpose-made to respond to this environment. We don’t expect to earn what Slaughter and May earn, but that’s not what we’re about. A lot of clients also don’t want to pay the prices of some City firms.”

DLA Piper’s rapid growth has been controversial, with some complaining that it expanded too quickly at the expense of quality.

Profits at DLA Piper have fallen by a quarter to $944,000 per partner as it absorbed the costs of continued international expansion and redundancies in London. Of the 50 firms ranked by Legal Business this year, nine were British, including five in the top ten.

Overall revenue was flat, at $55.8 billion, but rising staff numbers and costs contributed to an 8 per cent decline in collective profits to $20 billion.

The magazine calculated its rankings in US dollars based on the average exchange rate from May 2008 to April 2009 (the financial calendar for British firms) of £1 equalling $1.72.

Legal eagles

Top ten global law firms by 2008 revenues

1 DLA Piper, $2.26 billion
2 Linklaters, $2.23 billion
3 Freshfields, $2.22 billion
4 Skadden, $2.20 billion
5 Baker & McKenzie, $2.19 billion
6 Clifford Chance, $2.16 billion
7 Latham & Watkins, $1.92 billion
8 Allen & Overy, $1.88 billion
9 Jones Day, $1.52 billion
10 Sidley Austin, $1.49 billion
(exchange rate: £1 to $1.72)

Top ten global law firms by 2008 average compensation per partner
1 Wachtell, Lipton, $3.8m
2 Sullivan & Cromwell, $2.9m
3 Slaughter and May, $2.7m
4 Cravath, Swaine & Moore, $2.66m
5 Paul, Weiss, $2.65m
6 Simpson Thacher, $2.4m
7 Freshfields, $2.37m
8 Cleary Gottlieb, $2.32m
9 Debevoise & Plimpton, $2.2m
10 Davis Polk & Wardwell, $2m
Source: Legal Business

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