FTSE 100 general counsel (GC) say global firms have finally listened to their concerns on costs and that, if anything, the scales need to be tipped in favour of strengthening their relationship once more.
A year ago it was far from uncommon to hear the GCs of large international companies say that, while they battled to stay within a shrinking budget, their trusted advisers showed a surprising detachment from economic reality and a lack of empathy with their clients’ financial situation.
This year, the mood has changed somewhat. Vodafone’s group GC Rosemary Martin says: ‘There is evidence that [City firms are] hearing their clients calling for better pricing and responding to these by reducing their back office costs. They are hungrier and more responsive to the client’s needs.’
BG Group GC Graham Vinter says: ‘We’ve pushed the envelope a lot with driving fees down, with commoditisation and with offshoring and the bigger firms have got the message now and are doing that.’
One recent example of this is Global 100 firm Ashurst, which in June announced the launch of a 150-strong unit in Glasgow to handle back office support and volume legal work, including document review in litigation and corporate. GCs are also conscious that a number of law firms, including Eversheds, which this year made 116 staff redundant, are making cutbacks.
‘Some firms are starting to lay staff off and it seems the market is still tough for them,’ observes Martin.
At BAE Systems, group GC Philip Bramwell adds: ‘It’s been an interesting period, with the very top layer of firms focused on becoming as commercially efficient as they can, immensely client focused, extremely collaborative and highly responsive to our needs.’
Privately, GCs say that law firms are still slow to adopt some of the more innovative cost-saving business practices used by their clients, such as hot desking or moving to less expensive real estate. ‘It does feel peculiar that I’m paying for lawyers to have a set up that neither we nor many other businesses have these days,’ comments one GC.
That being said, the overall mood among GCs is extremely positive and ‘relationship’ is the buzz word this year.
‘I think now, on the demand and supply side in this equation, we need to focus on making sure we’ve got a sensible strategic relationship again,’ says Vinter.
However, GCs warn that the Global 100 law firms should not let adviser continuity slip and that the days of five to six associates per partner are numbered. ‘We want the partner consistently involved in our matters and I think the upper end of the market understands that, I see a change there, the leverage goes away,’ said Felix Ehrat, group GC of Novartis.
But rather than engaging in too much navel gazing, Vinter says firms should just ‘stick to the knitting.’
‘Law firms can sometimes be over-concerned with trying to find their unique selling point,’ he says. ‘They should stay close to their established clients and make sure they do what they need to do. If I were a senior partner that’s what I’d be telling them to do, secure the clients you already have and try to convince them there’s absolutely no reason to change and that you’re efficient, you get the legal answers right first time, you’re available and your advice is prompt.’
Nonetheless, in the unlikely event that a law firm starts to feel too comfortable with its market position, Telefónica UK’s GC Ed Smith issues a dose of reality: ‘We keep an eye on the possible future models, for example those offered by the likes of Riverview Law, which look ever more credible.’