Investment banking appears to be the only sector where the in-house legal department does not have almost complete control over the selection of external lawyers. Bankers would rather use their own judgement and personal contacts when it comes to seeking legal advice, making beauty parades largely redundant.
It also keeps investment banks closed off from firms that are not magic circle or US white shoe firms with a London presence.
In this sector one-to-one relationships are all-important, as financial houses consider it too risky to change their legal counsel when the work they undertake is so complex.
In a number of cases a banker’s client will be responsible for determining which firm is used on a deal. There is now an emphasis on firms’ branding to make sure the name on the deal prospectus is a respected one.
But the sector does appear to be opening up. Growth in the European economy is leading to an increase in M&A and leverage finance work, the majority of which is conducted out of London.
Consolidation within the investment sector between US banks and their European counterparts has forced firms to fight harder for the business.
It is a fight UK firms seem to be winning as top players in the US market are failing to cash in on opportunities in the London market. And if the market continues to move this way, with UK lawyers in the winning seat, the world of investment banking could open up.