U.S. Foreign Direct Investment in the London Legal Market: An Empirical Analysis

Abstract

This article examines the nature and timing of U.S. foreign direct investment (FDI) in the London legal market. Evidence from a survey of thirtyeight U.S. subsidiaries suggests that FDI has taken place primarily to serve U.S. clients located within the United Kingdom. The evidence also suggests that early investors (pre1990) belong to a core group of multinational companies with headquarters located in firsttier U.S. cities (New York, Chicago, Los Angeles). Later investors more typically hail from smaller cities. The evidence reveals a number of important differences between early versus late investors. Specifically, subsidiaries that were established prior to 1990 are more likely to enjoy local decisionmaking autonomy than are their counterparts that entered the London market more recently. The article concludes with a brief discussion of the implications of the survey findings for future research on FDI in professional services.