Inhouse counsel are shaping the 'New Law' evolution as cracks in Big Law emerge, says Michael Siebold, chairman of Interlaw.
The increased sophistication in the methods deployed by clients when procuring specialist advice, and the threats posed by globalisation and the rise of the ‘robot lawyer’, continue to be a constant headache for the legal services sector. This is especially the case for ‘Big Law’, as law firm networks become increasingly prominent players in the legal market with burgeoning volumes of business passing through these platforms year-on-year. Indeed, according to research published by the Association of Law Firm Networks in January 2018, such organisations account for a sizeable 10.9% of the global $1.1 trillion legal and accounting market. That’s bigger than the 50 largest law firms and “Big Four” legal, which account for just 4.5 per cent and 0.3 per cent respectively.
These findings are supported further by a new report – Global Legal Services in a Disruptive Word - published in February 2018. Surveying more than 100 general counsel (GCs) and senior in-house lawyers across 41 countries, the research reveals major cracks in the traditional law firm model, with 50 per cent of the respondents saying that as international law firms continue to grow, they have become more bogged down by internal operating pressures at the expense of client service.
Open-minded about alternative legal services
The report also confirms that senior in-house lawyers are becoming increasingly open-minded about using alternative legal services models with almost half (46 per cent) of those surveyed saying they already use or intend to use a network of independent firms. Indeed, 87 per cent of GCs were more focussed on the calibre of the service they receive than the structure of their provider. With this focus on quality in mind, many GCs also reported difficulties in finding a single law firm with the geographical reach in the practice areas they need with 50 per cent even saying they had witnessed inter-firm political wrangling, citing poor communication between teams (77 per cent), blocking relationships to preserve income for a particular office (62 per cent) and a lack of joined up working (62 per cent) as some of the constraints of Big Law. They also reported issues around inconsistent working practices between offices (19 per cent), as well as patchy local insight and cultural awareness (18 per cent).
This need for consistently high standards across all geographical markets will prove increasingly problematic for traditional international law firms to deliver on, particularly where we have seen many retreating from certain jurisdictions, closing offices or severing ties when mergers have turned sour. This, coupled with data revealing that 83 per cent of the lawyers at the top 30 ‘international law firms’ are based in Europe or North America, raises further questions on whether such law firms are indeed truly global. Marry this with an apparent lack of co-operation between the offices of some international firms - where the spirit of collaboration has been replaced with a protectionist culture – it soon becomes clear why alternative providers, such as networks – with their emphasis on collaboration and camaraderie, where people strive to perform at their best because they do not want to let their network colleagues down - are starting to steal a march on their Big Law rivals.
Indeed, of the GCs who said they have already used or intend to use a network of independent firms, 77 per cent describe their experience as good or excellent, using words such as 'convenient', 'dependable', 'efficient' and 'effective', with local insight and understanding of local culture cited as the most important benefits. That said, networks must acknowledge that there is still work to be done to convince some in-house lawyers of the benefits of networks, especially with words such as 'complicated' and 'confusing' being used to describe the model. Some networks also lag behind international firms on their ability to use consistent working practices, such as billing and project management. So, while we are extremely encouraged to learn that GCs are increasingly open to the network model, and in recognition that independent firms have the best insight in each geographical market, networks also need to show a commitment to taking the necessary steps to ensure our member firms can work together even more effectively for the benefit of clients. This means ongoing investment, collaboration and continued education.
Adapting and investing
In conducting this report, we wanted to gain an honest picture of what global clients need from their legal services provider. The message is very clear - quality of advice and service across all the markets clients operate in is top of the priority list, but for many, this is still challenging to find. So, in this 24/7, 365 days a year world, all legal providers must keep adapting and investing if we are going to deliver the seamless cross-border service clients demand. To read the report, click here. -