Over half of all clients think that the magic circle designation is redundant, with 94 per cent of them arguing that the profession should reclassify its peer groups, according to new research.
In a report to be released on Monday, based on research commissioned by Eversheds, a number of general counsel emphasised that working at a magic circle firm appears to give partners free rein to charge higher fees.
Linklaters corporate partner Charles Jacobs argued that the magic circle firms will still continue to dominate strategic matters.
“The crisis has shown us that the magic circle peer group still gets the lion’s share of the key deals,” he said. “Clients move down market in boom markets not in times of crisis for key transactions and advice. Would HM Treasury have gone to a non-magic circle firm for the Government bailout?”
The research also finds that the recession has led to 90 per cent of general counsel reporting direct pressure from their finance directors to reduce their respective legal spends.
Eversheds chief executive Bryan Hughes (pictured) claimed that this demonstrates a need for firms to “add real value”.
“Law firms need to demonstrate where they can add real value to a client’s in house team – 87 per cent of clients now say that value-added services such as secondees or free access to knowledge management resources are a crucial factor in their decision to instruct external law firms,” he commented.
As well as looking for better value for money, around 40 per cent of clients have implemented outsourcing of some kind, while around 20 per cent have had offers by firms to outsource on their behalf.
However, the report by Eversheds, which recently decided to expand its commoditised arm alongside premium City work (14 January 2010), is likely to re-ignite debate about whether clients will desert the magic circle en masse in favour of cheaper alternatives (2 June 2008).
The report Law Firm of the 21st Century: The Clients’ Revolution, which is a follow-up to Eversheds’ 2008 21st Century Lawyers report drew upon interviews with 130 clients and 80 partners at law firms.