In the decade prior to the collapse of Lehman Brothers, an excess of work masked the corrosive effect to law firms from competition with increasingly sophisticated and growing in-house legal departments (C&I teams). Post-Lehman, the economic downturn has exposed significant structural challenges to overstaffed law firms, which have been ruthlessly exploited by C&I to decisively shift the balance of power in favour of clients. Nevertheless, the triumph of in-house, measured by its rapid growth and ability to wrest increasingly complex work from law firms while simultaneously squeezing them on rates, may prove to be short-lived. Continue reading “Comment: Why the in-house triumph over law firms may prove short-lived”
Comment: The age of turbulence has only just begun for the UK’s top 100 firms
Respectable, yes, but 2012/13 was a tough year, even by the post-Lehman standards law firm leaders have become accustomed to. While a frantic run of consolidation and international expansion pushed revenue up 8% to £19.1bn, like-for-like growth was far more subdued.
On all objective measures of productivity and profitability, there were further slides, even before accounting for inflation. Back-of-the envelope calculations indicate that the UK’s top 100 law firms are about 25-30% off their boom-time highs in real terms underlying profitability.
Continue reading “Comment: The age of turbulence has only just begun for the UK’s top 100 firms”
Comment: If the mid-tier’s days are numbered why do they keep doing so well?
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. Continue reading “Comment: If the mid-tier’s days are numbered why do they keep doing so well?”
If the mid-tier’s days are numbered why do they keep doing so well?
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.
Continue reading “If the mid-tier’s days are numbered why do they keep doing so well?”
Dissent: Why the in-house triumph over law firms may prove short-lived
Scott Gibson and Kristi Edwards argue that GCs have secured a short-term advantage over their external advisers at the risk of undermining their own position
In the decade prior to the collapse of Lehman Brothers, an excess of work masked the corrosive effect to law firms from competition with increasingly sophisticated and growing in-house legal departments (C&I teams). Post-Lehman, the economic downturn has exposed significant structural challenges to overstaffed law firms, which have been ruthlessly exploited by C&I to decisively shift the balance of power in favour of clients.
Continue reading “Dissent: Why the in-house triumph over law firms may prove short-lived”
Guest post: Topline heroin – how global law became addicted to the wrong measure of success
One lens through which to view a large part of the corpus of business and management literature is that of metrics. Simply consider how much of what’s written consists of discussions about what to measure, what to optimize, and how to enhance all those numbers.
So, in retailing, we have such yardsticks as sales per square foot, same-store sales, sales per employee, inventory turn, store traffic, percent average markdown, and so forth. For mobile phone providers it would be customer churn, net customer growth/decline, network reach/coverage and network speed, cost per customer acquisition, and much more. Continue reading “Guest post: Topline heroin – how global law became addicted to the wrong measure of success”
Comment: The Asian century maybe but not the Asian decade for the Global 100
The market for the world’s largest law firms remains as reliably turbulent as ever. As this month’s edition of Legal Business shows, top 100 law firms in the world as a whole eked out a 4% hike in revenues to generate $84.9bn, a figure slightly flattering underlying growth due to a handful of sizeable mergers – including the creation of Herbert Smith Freehills and King & Wood Mallesons. Revenue per lawyer was flat. In real terms, the world’s legal elite is once again flat or modestly shrinking and headline income growth slowed in comparison to the 2011/12 year. Conditions remain considerably better than seen during 2009/10 but are a long way from pre-2008 boom years. Continue reading “Comment: The Asian century maybe but not the Asian decade for the Global 100”
Comment: Weil Gotshal and the narrative of the New Normal
Whatever the business case for announcing significant down-sizing, there is no doubt that in the field of modern communications Weil Gotshal & Manges scored a significant victory last week in its handling of job cuts.
Confirming its move to cut around 170 staff on 24 June and lower the compensation of 30 partners, Weil was joined up, transparent and eloquent, with executive partner Barry Wolf (pictured) on hand to put a jargon-lite case for its actions. The expected loss of 60 associates is equivalent to roughly 7% of Weil’s associate base. Continue reading “Comment: Weil Gotshal and the narrative of the New Normal”
Global 100: The Word from the World
The dominance of US firms; the challenges in Asia; the strategic dilemmas – leaders from the world’s elite law firms and bluechip clients give their perspective on a turbulent global market.
Comment: In defence of big – the maths are favouring two + two
How many times do you hear lawyers roll out the line about mergers having to be two-plus-two-makes-five? True in many regards. Getting bigger doesn’t make you better or necessarily solve structural and strategic issues and mergers are hard to pull off effectively.
But when it comes down to it, this truism has become pretty misleading in Law Firm Land 2013.
Because scale does indeed matter in law, all things being equal. Bigger firms have the economies of scale – and these advantages are only getting more important given the continual shift towards smaller and more process-driven panels. Continue reading “Comment: In defence of big – the maths are favouring two + two”