There is a price war raging in the London arbitration market that has led law firm leaders to question their commitment to the practice. Is the bubble bursting?
Arbitration was a practice area until recently seen by many managing partners as reliably high margin and partner-driven but for how much longer? According to a growing number of industry veterans, a softening arbitration market has resulted in a spate of lowballing, particularly in London. While the average legal cost of arbitration at the International Centre for Settlement of Investment Disputes (ICSID) stands at $4.5m, according to a 2014 report by Allen & Overy, some advisers are winning work by promising to run the entire case for less than a tenth of that sum. While such claims are anecdotal, the Lebanese government recently released pitch information that showed 11 international law firms had pitched between $350,000 and $1m to defend it against an ICSID claim. The lowest bidder, Paris-based Bredin Prat, won the instruction.