Legal Business Blogs

Comment: It’s the ‘decade of the lawyer’ – Law firms beware

Our third annual GC Power List report looks more like a state-of-the profession piece than its two predecessors. While the earlier reports focused on standout individuals, in 2015 we highlight 50 exceptional in-house teams, which inevitably addresses how clients operate.

Even a cursory glance at how these teams have evolved underlines the huge shift that has been taking place in the UK legal profession over the last 15 years: the best in-house legal teams are seizing influence, technical skills and budget, largely from their service providers.

This is particularly notable when it comes to managing their people. High-flying GCs are obsessive about talent and retention. This is largely why they strive to retain interesting work in-house: cost-saving is merely a justification, the primary reason is to motivate and develop their talent with engaging work.

Likewise, expanding in-house teams are using their scale to build formidable industry know-how. A common theme from our research is that law firms are failing to keep up with advances in sector insight at clients.

Even discounting some of the overblown claims about the savviness of GCs as buyers it is clear that bluechips in the UK have become materially more sophisticated purchasers of legal services since the banking crisis.

Successful in-house teams also usually display two related organisational characteristics: firstly an ability to step outside the day-to-day grind to deploy some measure of medium-term thinking and, secondly, develop a co-ordinated approach to building strong links with the business. Failing on these counts is a pretty reliable marker of the teams that struggle.

Those are the common experiences across in-house but huge differences remain between industries (the revenue-per-lawyer range in-house remains startlingly wide even between many comparable businesses). Beyond that it is increasingly obvious that there are two very different dynamics for the in-house profession. GCs working in heavily regulated and contentious sectors have built up vast legal teams interconnected with compliance functions in recent years. Those in less regulated sectors like retail and real estate have maintained surprisingly lean operations. In future, strategic thinking and operational support for in-house may have to more clearly recognise these very different models.

These observations lead to several conclusions. Firstly, these shifts represent an existential challenge to law firms as in-house counsel press their service providers into narrower roles. It’s not clear that law firms have grappled with the troubling implications of this for their business models. And, if we are currently witnessing the glory days for corporate legal teams, as ITV’s Andrew Garard convincingly asserts, then the UK profession is arguably overtaking its US equivalents in terms of sophistication. If true, those are two highly significant trends for the global legal market that will be playing out for years to come.

For more analysis of succesful in-house teams see: The A-Teams – In Pursuit of Excellence