21 November 2007
11 October 2013
17 March 2014
18 February 2014
31 March 2014
25 November 2013
Pitching for places on company legal panels and roles in deals has become increasingly crucial for firms. The competition has grown, with more companies now venturing outside the magic circle for advice and the looming backlash of the credit crunch weighing down the deals market.
The pitching process, often referred to as a beauty parade, involves a number of invited law firms proposing to work on either particular deals or to secure a place on a companys regular panel.
While trainees are usually not involved in much of the pitching process, which is normally carried out at partner level, there are cases where trainees may be required to contribute.
Nigel Higgins, director of marketing at law firm Bircham Dyson Bell, says that trainees do sometimes get involved in pitches.
We tend to involve trainees in the research and drafting stages of a proposal if it is a large-scale job, he explains.
However, Higgins adds that it is unusual for a trainee to be more involved in the process as clients typically demand that senior lawyers work on their jobs. Also, partners feel that the pressure of the process might intimidate trainees.
Panel reviews are typically carried out by company legal heads or general counsel on a yearly or three-yearly basis. Each head of legal will have different criteria and requirements for firms depending on the nature of the business and the cultural style of the company.
While some general counsel prefer firms with extensive in-depth knowledge on specific subject matters or jurisdictions, others may request details on corporate social responsibility (CSR) initiatives and diversity statistics.
Transport for London (TfL) head of legal Gareth John is noted for his CSR-driven requests. In TfLs most recent panel review (see www.thelawyer.com, 30 Jul 2007), John requested a list of information pertaining to diversity from all firms that were tendering for a place on the companys panel. This list included statistics on diversity and quarterly data, which John says he will continue to request from firms once they have been appointed to the panel.
Banks appear to be at the forefront of CSR-related requests for panel reviews, with investment bank JPMorgan requesting diversity statistics in its recent panel review in May. JPMorgan general counsel Tim Hailes requested that firms provide information on their diversity make-up, including their lesbian, gay, bisexual and transgender policy.
At the time, Hailes said that the measures were aimed at looking at whether firms were taking practical action on diversity as opposed to simply ticking boxes.
Other banks that have made the headlines for making such requests include HSBC, Barclays and UBS.
Although diversity is a key current issue, it makes up only a small percentage of the pitching exercise itself, which involves extensive research, drafting, and innovative thinking.
The pitching process kicks off when the firm receives an invitation to tender.
This letter will set out exactly what to tender for (specific jobs or a specific panel), the date to respond by, the form of response (letter/meeting), if the prospective client requires a presentation and any additional requirements.
Firms usually have a dedicated person who coordinates all tenders. This person decides which partner will lead the pitch and works with that partner on assembling the best-suited team for the tender.
Firms are typically given around two weeks to respond to invitations to tender, although there are occasions that require faster responses. Once the tender document has been compiled, the lead partner will then sign it off before submitting it to the client.
The response process is completely client-driven, with some clients appointing firms straight out and others choosing to meet the proposed team. Here, clients usually prefer to meet only two or three members of the team.
These meetings can be merely verbal, but if required, the team will hold a presentation, which may include visual aids such as PowerPoint. The team will also use this opportunity to respond to any questions and demonstrate their knowledge and ability to handle the proposed role.
Fees will be determined before the tender document is dispatched, and may be altered or further negotiated at later stages of the process. Panel reviews will often be used by clients as a tool for negotiating discounts in chargeout rates, with new and innovative fee structures emerging as a result.
Hourly chargeout rates vary according to rank, with trainees charging the least and partners the most.
As first revealed by The Lawyer magazine this week (19 November) average hourly partner rates at magic circle firms have risen by 67 per cent, from 375 to 625 during the past four years, with the cost of specialist tax or regulatory advice coming in at around 700 per hour. At national firms partner rates have spiralled by 89 per cent, from 185 to 350 an hour, according to a study carried out by Legal Budgets in conjunction with The Lawyer.
Meanwhile, newly qualifieds at the magic circle charge 235 an hour compared with 175 four years ago.
Hourly rates are often supplemented with alternative fee structures such as a blended rate. This covers all the lawyers in the team at all levels. The firm can also offer discounts of 10 to 15 per cent on the rates at their own discretion.
Firms also offer value-added benefits such as training for the clients in-house team and secondments. The firm will usually set out its fee-structure, including any value-adding measures, before they sign up to take on the work.
Due to the wide variety of legal challenges a company may face, organisations often break up their legal panels to reflect these issues.
Panels can be set up specifically for any area of an organisations business. Each company has different needs, with banks such as ABN Amro appointing firms into panels for structured finance, loans and trade, debt and capital markets and so forth. BT has panels for global regulatory and antitrust issues and outsourcing.
This panel deals with work relating to mergers and acquisitions and disposals and is quite a lucrative panel place to win. At the top of the table in terms of corporate work are firms such as Linklaters, which is on the corporate panel of J Sainsbury and has recently secured a place on Lindes corporate panel.
Employment panels cater for legal matters pertaining to employment, from drafting staff handbooks to advising on employment tribunal issues. Last month saw DHL appoint its first employment panel (The Lawyer, 13 August), opting for Beachcroft, Brabners Chaffe Street, Clyde & Co and Eversheds.
Litigation and alternative dispute resolution panels are becoming increasingly popular. Last month saw reinsurer Swiss Re embark on a review of its insurance disputes panel with firms such as Allen & Overy, Clyde & Co and CMS Cameron McKenna being strong contenders for places.
This is a panel dedicated to advising on real estate and property matters. Last April, Hermes appointed Berwin Leighton Paisner and Nabarro onto its real estate panel while retaining Lawrence Graham and Maxwell Winward.