At one point in our Regional Insight report – a major collaboration with our colleagues at The Legal 500 included with this issue of Legal Business – one GC based in the North West discusses a recent pitch in which a City law firm came out best on price against regional rivals. Surprising as it may seem, it is reflective of a dynamic that has seen London advisers focus on handling work from UK regions after realising that simply aspiring to be a City leader is a road to nowhere for many firms.
This shift in focus comes with the acknowledgement that post-Lehman, demand for external law firm services in the UK has become more polarised. The need for high-end transactional and disputes advice still exists but is increasingly now the preserve of the elite firms in those fields in London. At the opposite end, in-house teams are retaining more work and will only outsource work to law firms if it is cost effective.
Two-thirds of respondents to our survey said they expected their demand for legal services to be unchanged in the next six to 24 months, while 13% said demand would decrease, reflecting a trend that was clearly evident in our In-House Survey in October – more matters are being retained in-house; when it goes external, it has to count.
Many clients active in London are being priced out of the market and are turning to cheaper alternatives. Even leading international firms such as Allen & Overy and Herbert Smith Freehills have established low cost centres in Belfast in recent years, while Simmons & Simmons, Berwin Leighton Paisner and Hogan Lovells have opened in Bristol, Manchester and Birmingham respectively.
In many ways, what has happened in Scotland reflects this new dynamic. After the banking crisis, the traditional ‘big four’ law firms – Dundas & Wilson, Maclay Murray Spens, McGrigors and Shepherd and Wedderburn – were decimated, largely because their heads were turned towards London. This created a gap in the market for agile and competitively priced law firms such as Brodies and Burness Paull.
The report, which draws on responses from more than 1,200 clients across the UK, also demonstrates the extent to which clients are focused primarily on just a handful of areas when it comes to calling in lawyers, with compliance, regulatory issues and employment issues continuing to dominate. It’s a vast potential market, but one which no law firm or provider has yet managed to monopolise.
Yet, as we point out in our overview to the Regional Insight, the UK market has become less fragmented, with firms like Bond Dickinson, Blake Morgan and DWF all striving to make regional bias less of an issue now than it ever was. There is no north-south divide when it comes to legal services anymore. On the one hand you have premium City-based services that attract the highest fees. But for business-based legal advice involving everyone else, the entire country has become a battleground.
For the Regional Insight in full, click here.