I read with interest Kevin Wheeler’s opinion article (The Lawyer, 2 June) on Eversheds‘ The Law Firm of the 21st Century report, which was conducted by me and my team at RSG Consulting on behalf of Eversheds. It is a far-ranging study of FTSE250 and investment bank clients and UK top 25 lawyers. Mr Wheeler has focused on one aspect of it and has not understood how this aspect fits into the whole.
The report was a qualitative study consisting of 45-minute telephone interviews with 50 partners at top 25 law firms, and with general counsel, legal directors and finance directors at 50 of the world’s most prominent companies and investment banks. As well as covering the current and future challenges partners and clients face, it analysed meaty topics such as work-life balance and the opportunities of outsourcing and outside investment.
Eversheds shows itself as neither naive nor green-eyed by highlighting that 34 per cent of these clients plan to buy more legal services from firms outside the magic circle. This statistic represents spontaneous mentions from a third of client interviewees. The report does not suggest that ‘bet the company’ work will go outside the magic circle. But a significant number of highly desirable clients did state that banking and M&A work – normally the preserve of the magic circle – would go to other firms.
It was notable that a quarter of the potential movers referred, unprompted, to Eversheds. Quotes include “the new kids on the block” and “the one firm I know of that is much more progressive”. Interviews were carried out on a confidential basis and the sponsor of the research was not revealed.
Mr Wheeler does not mention the significant challenges for the profession highlighted in the report. More than half the clients interviewed (55 per cent) said rises in law firm fees were unsustainable, and slightly more (57 per cent) said controlling costs was their biggest challenge of the next 10 years. This angst is in marked contrast to the sanguine view of partners, only 21 per cent of whom felt fee levels would be their greatest challenge. This gap in understanding between law firms and clients presents firms such as Eversheds, and others willing to take a fresh approach to client service, with an opportunity.
The most interesting point Mr Wheeler raises is whether this angst over fees and controlling costs is new. The answer is no. But the response of some of the clients we interviewed marked a step change.
As we said in our full report for Eversheds: “Many other clients are looking to diversify their spend away from the magic circle on the basis that fees are prohibitive, with little value added. Although few leading firms escaped criticism on this point, magic circle firms are considered particular culprits. Some magic circle partners said they see many more different types of firms on pitches, and that the whole market is simply becoming more competitive. There are now many firms outside the magic circle who are considered capable of competing on equal terms.”
Clients told us that law firms must provide added value for them. From this research it is clear that both firms and clients must think anew about how legal services are delivered and paid for. But the onus is on firms to better understand the pressures on their clients.
It has long been a favourite pastime of City law firms and commentators to dismiss Eversheds and other ex-regional firms, such as DLA Piper, as a threat. However, we noticed a very different attitude from clients in the 21st Century research. They are more open to the value propositions from these firms than ever before.
So should Eversheds be derided as green-eyed or naive because it has sought to explore the future and attempted to understand what top clients and lawyers think that future will be? I think not.