I’ve lost count of the number of times lawyers and law firm consultants have predicted consolidation in the UK legal market. The concept appears to be so devoutly wished for that it has virtually been elevated to a moral imperative. So why hasn’t it happened?
One reason is that lawyers are simply too conservative to put themselves through disruption for the sake of an abstract principle. But at bottom it’s because consolidation can only come from irresistible external forces.
Unlike other business sectors, the law has barely altered over the past two decades. Delivery of services has sped up through technology, but technology has not fundamentally changed the structure of the profession in the way that it has the media industry, for example.
A top 100 table published by The Lawyer in 1988 and reprinted in our 20th anniversary edition last year shows how little change there has been; almost all the same names are there, and only Oppenheimers and Turner Kenneth Brown collapsed.
Sure, there have been mini-trends initiated by firms themselves, such as the big City practices offloading their private client departments in the 1990s. And UK law firm expansion into overseas jurisdictions forced considerable consolidation on the Continent, particularly in Germany.
But domestically the most influential forces for change so far have been insurance companies, which were the pioneers of panel systems. The vast majority of mergers since 1988 have been in that sector, because of insurance companies’ demands. Their warehouse approach to legal services drove commoditisation, and that in turn provided much of the impetus for the Legal Services Act.
Now it’s banks’ turn, bless them. As we reveal, a number of firms are in the banks’ intensive care units, and the banks will almost certainly be forcing mergers and demergers. The firms that didn’t use the fat years to get their financial management right can wave goodbye to their autonomy now.
The law is too often seen as an employment programme for the middle classes – a nice earner with not much risk. Maybe not for long.