Magic circle tag redundant, Eversheds research finds
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.
Firms that have offered outsourcing as part of a menu of options to their clients include Allen & Overy, Eversheds, Lovells and Slaughter and May. See here for an extensive list of who has done what.
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.
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Readers' comments (36)
Michael Foot | 18-Mar-2010 2:07 pm
"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). "
No it won't. And they won't.
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Anonymous | 18-Mar-2010 2:57 pm
Is this "research commissioned by Eversheds" the most self-serving, steaming pile of bulls**t ever? Certainly sounds that way.
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HGR | 18-Mar-2010 3:06 pm
What is "Eversheds"?
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Anonymous | 18-Mar-2010 3:28 pm
Hilarious not least of which because they thought the use of the word "redundant" was somehow appropriate given the plethora of lay-offs over the last 18 months.
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Antonio Gramsci | 18-Mar-2010 3:39 pm
If anything, the magic circle has put more clear water than ever between it and the chasing pack. Size might not be everything but it's a start, and those firms dwarf the likes of 'Sheds and Herbies when it comes to turnover, headcount etc.
These green-eyed window pressers should face it: There is a difference and the sooner they realise there's more than one division to compete in, the happier everyone will be
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Big Dave | 18-Mar-2010 4:02 pm
Thanks for this Eversheds. I expect this news will produce seismic change in the industry, just like your 2008 'report' with a similar name.
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Anonymous | 18-Mar-2010 4:13 pm
I see the lawyers at the Magic Circle have nothing better to do than comment on The Lawyer website. I wonder which client they've been charging for their time?
Here, here I say. As an ex Magic Circle lawyer that has spent time in-house, I couldn't agree more with the findings. It's about time people realised just how arrogant and exploitative the Magic Circle firms really are.
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IHateBPP | 18-Mar-2010 4:20 pm
Maybe Eversheds could start its own peer group called the Tragic Circle composed of similarly minded firms that see no problem in sacking staff at the drop of a hat.
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Anonymous | 18-Mar-2010 4:21 pm
The term Magic Circle refers to those firms well equipped to handle the top notch, big ticket and most complex public M&A, finance and capital markets transactions. No other firm can boast the quality that can be offered by the Magic Circle in these areas (some are close depending on the practice area (e.g. Herbies)), so the term is still more or less valid and will be for the foreseeable future.
In other practice areas, the usefulness of the term MC is debatable.
It should have been pretty obvious from the start that if the report was commissioned by a practice not considered to be part of the MC, that firm would say the term MC is irrelevant. Have absolutely no idea why E-Sheds would even want to come out with this report - shooting themselves in the foot in terms of PR.
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Nick | 18-Mar-2010 4:23 pm
As descriptions of the firms as businesses the label 'Magic Circle' still has some usefulness, although the increasing size gap between the big four and Slaughter & May makes it likely to be used less in the future.
As descriptions of client experience the term is poor to useless. There are a great many poor lawyers at Magic Circle firms (although the average quality is very high), and a lot of excellent lawyers at other firms.
The quality of service across all departments at all of the Magic Circle firms is highly variable, as one would expect in view of their size and the fact that they are afterall different firms with different managements.
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