Outsourcing was 2009’s big deal
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This time last year it felt as if we were all staring into an abyss. Law firm leaders were beginning to question their very business model. But of the big events last year only one - the Linklaters New World restructure - falls into the category of root-and-branch thinking.
The Norton Rose-Deacons and Lovells-Hogan deals are by contrast products of strategic impasses; both are buying into a global model that the likes of Freshfields and Linklaters are moving away from.
My worry is that the goodwill towards Lovells in the market is based less on an analysis of the deal and more on the desire to give a hug to one of the nicer firms in the City. (See page 16 for news editor Margaret Taylor’s feature, the first major interview with the Lovells team since the merger was signed last month.)
The more far-reaching shift in 2009 was the emergence of outsourcing as a management tool, and as we report this week, this is colouring law firm thinking. Most managing partners are actively investigating it, and with good reason - clients like it. Rio Tinto paved the way here, and indeed its managing attorney Leah Cooper is in our Hot 100 list this year for her pioneering work in this area.
Last year Allen & Overy, Eversheds, Pinsent Masons, Simmons & Simmons and, most significantly, Slaughter and May began investigating outsourcing programmes. In the
long run this will change the dynamics of the legal market more than mergers, however well-conceived they are.
There is one section of the legal profession that has thrived in the past 12 months, and that is the bar. Our report today on Ofgem’s decision to use direct access confirms the trend; the bar is becoming hugely popular with clients who rather like the notion of paying for legal advice rather than what they see as mere process.
With this issue of The Lawyer is The Hot 100 2010, which is one of our favourite projects. We think this year’s is one of the most interesting yet, as the individuals featured have all shone despite one of the toughest years on record. Congratulations to them all.
Readers' comments (2)
Suhasini Sakhare | 5-Jan-2010 9:09 am
Great reading this, would welcome more analysais that views outsourcing as a slowly emerging part of the legal service delivery chain, rather than being antipodal to the work of lawyers.
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Dirt | 5-Jan-2010 1:05 pm
It's funny that Cat prefers to paint everyone else's support of the Hogan-Lovells merger as knee-jerk, when in fact she's the prejudiced one in her blind belief that all firms should ape the magic circle in all that they do.
There's plenty of analysis behind the idea that this is a wise move: the nice overlaps in practices, the relatively good geographical matches. I suppose you could argue it's "born of strategic impasse" in the sense that neither firm was about to radically change its market position without a merger; but you can say that about any merger. Once this completes there'll be no high-end firm with the same critical mass on both sides of the Atlantic; why is it so hard for Cat to think that might be significant?
Freshfields and Links are moving away from global coverage because they're refocusing more tightly than ever on the largest, most profitable deals. Hogan and Lovells both rightly realise that isn't an option for them: what does work for them is IP, litigation, real estate and corporate for US clients, all of which will benefit hugely from the merger.
I should say incidentally that I'm in no way affiliated to either firm.
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