We’ve had five years of unforgiving conditions for law firms, everyone agrees. And in many respects that squeeze has had predictable results on the upper echelons and lower half of the LB100. But this year it’s the mid-tier which has had the most interesting 12 months. This group should by rights and conventional wisdom be on its knees, yet judged on 2012/13 results they aren’t. Looking at organic growth, plenty of firms in the 26-50 range out-shone larger rivals and many of the stand-out performances this year – among them Mishcon de Reya, Holman Fenwick Willan, Macfarlanes and RPC – hail from this segment.
Neither is this a one-year deal – there are plenty of firms in this weight class that have maintained a robust five-year growth track, powered by strong niches in areas like private client, TMT and insurance and a general affinity for contentious work.
It is a reminder that there is nothing inherently wrong with a domestic or mid-market focus. It is just one model with its own strengths and weaknesses. Executed with a genuine feel for those strengths it delivers not just well but sometimes spectacularly.
Many say the mid-market will be squeezed at both ends – well, another way to think of it is that the better ones are kept sharp by competition on two fronts, a contrast with their larger rivals who, facing fewer natural predators, have often evolved into lumbering beasts.
What is true is that operating in the mid-tier is inherently riskier than life in the big leagues. Larger firms can get away with a far greater degree of drift – a trend apparent to varying degrees in recent years at firms including CMS Cameron McKenna, SJ Berwin, Eversheds and Simmons & Simmons. In comparison, second quartile law firms are far more prone to being destabilised by partner departures or a general loss of confidence. Mid-tier advisers either move forwards or backwards – there is precious little in the middle.
But what they lack in defensive positioning, they often more than make up for in manoeuvrability – the ability to quickly galvanise and focus their practice and win the hearts and minds of their own partnership.
Put all that together and it is not just that this group can survive, it is entirely possible that this battle-hardened second 25 are about to truly come into their own as larger and more sprawling rivals increasingly shift focus to the global stage.
Law firms over-obsess about models that have less to do with their success or failure than often imagined. The bottom line is that good law firms beat bad ones. But beyond that, there is a far brighter future for quality mid-tier players than is commonly supposed. Just don’t ask me to come up with a name for them.