Eversheds is often up to interesting things.
One of the most attention-getting, which was just renewed for another year, was Tyco’s decision to entrust work it had previously distributed among 250 law firms exclusively to Eversheds. Here’s the deal in a nutshell:
"Tyco has signed up for the second year of its groundbreaking $10m (£5.14m) deal with Eversheds, with a number of new innovations added to financially reward good performance and diversity achievements.
"Eversheds is set for six-figure bonuses if it achieves a 35 per cent improvement in client satisfaction and if litigation against Tyco drops by 15 per cent.
"Tyco’s Europe, Middle East and Africa general counsel Trevor Faure told The Lawyer: “We’ve designed something that eliminates the zero-sum game and replaced it with a profitable partnership.”
And Eversheds’ propensity for innovation seems to be paying off, or at least not hurting. Their 2007 results saw total revenue and PPP both grow by 10% over 2006 (to $780-million and $1,004,000, respectively).
But this column actually isn’t about Eversheds.
It’s about a fascinating report they commissioned, The Law Firm of the 21st Century, which set about to answer the question: "How will our law firm need to change to meet the needs of our clients, our people and society in the future?" And the challenges are well-known and not unique to Eversheds:
"The globalisation of business, the demand for greater value from clients, the struggle for talent, the need to be responsible citizens, the desire for greater balance in our working lives: These issues and more all need to be tackled as the current century progresses."
What’s new and different is that this was no exercise in crystal ball (or navel) gazing. Eversheds commissioned RSG Consulting to conduct 100 interviews in late 2007 and early 2008 with 50 partners at top 25 firms along with general counsel and others at 50 of the globe’s most prominent companies and investment banks. Here’s what they learned:
The future law firm
Billing is more likely to be a matter of shared risk with clients. Advice today considered premium will become commoditized. More interestingly, "lawyers themselves will become more commercial," doing more than delivering black letter law and working more closely in conjunction with clients’ business people.
Most intriguingly, they flatly renounce any radical reforms on the famous "work-life balance" front: "Internally, we still can’t see an end to long hours and a compromised work-life…" Nor do they see firms going public, but they do foresee some alternative career paths.
Core findings
- Clients are increasingly concerned, and vocal, about rising fees. 55% of in-house counsel said that the recent growth in fees is unsustainable.
- Nevertheless, only a small minority of clients (22%) volunteered that value billing and risk sharing would be of greater importance in the future, whereas an evidently more forward-looking 48% of partners mentioned them.
- Not surprisingly, lawyers and clients diverge on cost control: 57% of in house counsel say it’s a key priority but only 21% of law firm partners agree.
- Inhouse lawyers focus more on predictability and certainty than on the absolute level of fees.
- The "hegemony" of the Magic Circle will become, well, less hegemonic, as clients look to obtain legal services elsewhere, seeking both better value for money and better service.
- Although law firm partners thought consolidation would affect mid-tier firms more than the very high end, many also thought the legal market would become "more brutal" and that firms would increasingly need to merge to survive.
- But when the key to the client/lawyer relationship is explored, it is "sacrosanct–you just can’t use lawyers that you don’t trust."
- Despite the countless barrels of ink (or megabytes of server storage) that have been spilled predicting the demise of the billable hour, do not by any means count it out yet: 82% of law firm partners and an amazing 86% of clients believe it will "be alive and well in ten years time." And not because it’s well-loved, but because it’s well understood.
- The vaunted reforms in the Legal Services Act will have "limited impact." 73% of law firm partners felt it would result only in insignificant changes, and while 55% of clients said they were unconcerned about the organizational form of their legal advisers, 24% contradicted that and said they would be dubious about an incorporated firm and were positively in favor of the partnership model.
- While much advice will become commoditized, "expert advice never will be." When I read this, I thought it rather tautological: After all, "expert" advice is by definition the antithesis of "commoditized." Yet there may be something here after all, and it actually reveals that commoditization has a long way to go. Namely, while half of clients say they believe standardization "could add value," fewer than one in five say they’ve actually had any direct experience with it. My take? Far more bruited about than reality.
- The "work-life balance" problem is no problem at all at the top: 77% of law firm partners report their firms are good places to work, and one-third report they’re better places to work than 10 years ago. (How many might feel they’re worse is not reported.)
- Comments included "Unless you’ve got motivated people, you won’t get excellent client service," and "the easy answer is no [to work-life balance]. You can fiddle around at the edges. But at the end of the day, clients expect 24/7 from the leading firms."
- Especially for transactional work, 56% of partners and 45% of clients thought flexible working was not a credible approach: "To be honest, when we’re paying these huge fees [said a client], we do expect our lawyers to be there and it’s difficult to accept if they are not there when we need them."
- Finally, on work-life balance: 56% of clients and 45% of partners believe more flexible hours are not a realistic solution. More specifically, while 51% of clients believe firms ought to be able to offer a "credible" balance alongside excellent client service (and did not see their demands as part of the problem), 48% of partners thought that work-life balance and top-notch client service are "a contradiction in terms."
Reaction
Here we have some of the best-informed and most thoughtful people in the English-speaking legal world responding to an important Eversheds–nay, make that industry–initiative. At the very least, "attention must be paid."
My take on it is that the changes expected are both more and less radical than we have imagined.
On the "conservative" side, the billable hour has a long half-life, work-life balance is a dream for another decade, and the Legal Services Act will have no immediate impact.
On the "liberal" side, the "chasing pack" behind the Magic Circle may find it has more traction than heretofore, lawyers will become more closely aligned than ever to their clients’ true business concerns, cost control (and its ugly sister, commoditization) will finally begin to rise above the horizon, and consolidation among mid-tier firms is irresistible.
Permit me, however, to editorialize for a moment on "work/life balance." I don’t believe you can have it at a top-notch firm.
There are utterly gilt-edged, top-of-the-world firms, and there are mid-tier, lifestyle firms: Both can deliver great client service in their sectors and both fill genuine economic and sociocultural niches. But they’re fundamentally different creatures bringing with them fundamentally different expectations by clients for service and by colleagues within the firm for the level of commitment to the firm, the client, and the cause.
A few days ago in the WSJ Law Blog the author published a recap of a lunch he had with David Gordon, managing partner of Latham’s New York office. Gordon was asked for his advice for associates, and he summed it up in terms of "commitment:"
"Make a Commitment: A successful associate has to be committed, to “your profession, your colleagues, and your clients.” Driving these points home, he said:
"Commitment to your profession: Don’t “judge your job too harshly or too quickly,” Gordon said, adding that it’s a rare job that is perfect. “If you’re happy with your job 60 to 80 percent of the time, that’s really a pretty good job.”
"Commitment to your colleagues: Be ready to step up to the plate, Gordon says. “You earn so much respect by being there when you need to be there with your brain engaged,” Gordon says. Good work “helps give you cover when you’ll need it for mistakes you’ll inevitably make.”
"Commitment to your clients: “If you’re not committed to your clients, then you’re in the wrong business.”
Unexceptional, say you? Indeed, thought I.
Until I started reading the comments, many of which were excoriating of Gordon’s remarks and the whole notion of "commitment." (If you want to get seriously depressed, take a look.)
But people who are opposed to commitment are fundamentally unserious and unworthy of attention.
Public confession to you, Dear Reader: In my career, I have experienced commitment and I have experienced the absence of commitment. Commitment’s better.
All in all, the Eversheds study strikes me as a surprisingly sane and non-radical vision of our futures–which, given the research sample, is precisely to be expected, is it not? And I’m utterly prepared to believe it, until I remind myself that capitalism has a way of surprising everyone involved.
Update: A reader in an AmLaw 25 writes:
"Small point
on "expert" and "commoditized" service. There
will always be both. That said, I think what constitutes either will
evolve. Some of what is viewed as expert now – will devolve into commodity. New
areas (unseen before – maybe new types of financings to emerge from the current
crisis) may be the new "expert" (i.e., the always-sought-after
high value engagements) areas."
Points well taken. What’s "expert" is always a moving target. Remember
when Sarbanes-Oxley was the subject of innumerable law firm seminars explaining
this wild and woolly new frontier of securities law?
And from another commentator comes this:
"Bruce
The Eversheds report is interesting but I think fatally flawed. Not I hasten
to add from a methodological perspective. Indeed it was carried out by one of
the attendees at the Georgetown Symposium we both attended.The really awkward comment for me was: "The "hegemony" of
the Magic Circle will become, well, less hegemonic, as clients look to obtain
legal services elsewhere, seeking both better value for money and better
service."From what we heard at the Georgetown Symposium, it was clear that corporate
counsel would not be gulled by the longstanding ways of big law firms. Yet
there were powerful data and forecasts that showed that those law firms already
in the vanguard would not only stay there but actually increase their revenues
and power in the market. Peter Sherer’s article in this month’s American Lawyer
bears this out.And if, with a nod to your perceptive piece on legal education, these firms
are able to move law schools or training institutions towards providing "right
brain skills" to augment their legal skills, they should effectively
capture the market.My feeling is that Eversheds wants to show that it ought to be in or close
to the Magic Circle, but size doesn’t mean you can always join the big boys
club.best wishes,
[…]"
