Big company clients are sticking with the City for their lawyers but are less loyal and are using more beauty parades, claims a recent study.
According to research from Focus Consulting, over half of the respondent companies said advisers should pitch regularly for work. Sixty per cent said they had considered or are considering changing City advisers.
Specialised teams able to deliver on specific projects are paramount, rather than maintaining cosy established relationships, the study found.
Use of law firms relates to size of client. Among FTSE 11 and Mid-250 companies, 90 per cent rely on City firms, while regional firms fare better in the smaller companies sector. There, 69 per cent use the City, said Focus.
Smaller City firms are also failing to make an impact on the corporate market. Almost 40 per cent of respondents said the 'quality of advice gap' between large and small City firms has widened in recent years, while only 1 per cent said it had narrowed.
The value for money issue rages unabated. Lawyers came in for the worst criticism out of all corporate advice surveyed – including merchant bankers, brokers and accountants. A common complaint was that “legal costs are becoming outrageous,” said Focus.
The most often cited reasons for a company switching advisers were “changing corporate needs” (70 per cent of respondents) and “underperformance” (61 per cent).
Focus managing director Rupert Ashe said: “Value for money is the real 'hot potato' for the legal profession…and I suspect that more companies will start to judge their retained lawyers on this basis.”