So what’s on everyone’s mind here?
Actually, the same things that are on everyone’s minds in the US, although the Brits express it in their own unmistakable and uniquely articulate ways.
Here are the key topics:
- The Hogan/Lovells, Sonnenschein/Dentons, and putative Proskauer/SJ Berwin mergers are still viewed-I generalize here-as anecdotes and not as the start of a trend. People see them as one-off’s, each done for sui generis reasons unique to the goals of the firms involved in each transaction, and not as kicking off a US/UK combination rush.
- Although this sounds entirely plausible on its face, I wonder.
- Why do I wonder? Consider the landscape facing the “Silver Circle,” or, perhaps a bit more broadly, UK firms #6-20 or so. The Magic Circle, if anything, have put more “clear blue water” than ever between themselves and the chasing pack during the Great Reset? This makes moving up-market beyond implausible and into the realm of the quixotic, at least within the timeframe of a typical managing partner’s tenure. Yet remaining mid-market and largely within the UK–granted, many have meaningful foreign networks but they can’t make a strong claim to being “global”–seems increasingly a recipe for stagnation if not irrelevance. On the other hand, US firms tend to have powerful domestic-US networks but, by and large, lack critical mass in London and lack a mature EU network. Perhaps adding the two together is beginning to make more sense, despite the eurozone’s current conniptions.
- Legal process outsourcing is here to stay. Opinions vary on whether it will occur quickly or slowly, whether it will be done internally by firms creating their own lower-cost-center operations or primarily by new players, and whether it will occur primarily in emerging economies such as India, Malaysia, and the Phillipines, or whether it will occur in places like the US Midwest, the north of England, and Eastern Europe.
- Firms everywhere are radically taking costs out of their structures. This can include personnel (read: RIF’s or “redundancy consultations”), slimming locations, rationalizing other sorts of operations including staff and administrative overhead, and even taking closer account of office expenses such as copying, catering, and so forth. Can you say “purchasing agents?”
- Pricing pressure is everywhere. Depending on the firm, the sector, industry, the practice area, and the client base, prices are off anywhere from 0% to 25%. Some firms are engaging in what I call idiotic pricing, training their clients to enjoy steep discounts. This will not stand. It will not stand for the firms that engage in it, that is; clients are only too happy to oblige our islands and pockets of insanity. And firms that do this are training clients in the worst sort of possible behavior.
- Finally, and most importantly, everyone is re-examining their fundamental assumptions and strategies.
- Firms who used to be able to straddle two or more different markets or business models can no longer do so and must now choose.
- Firms with different–materially different–levels of professional talent within their ranks must now choose.
- Firms with alternative pricing models for their various services don’t necessarily have to choose, but they have to clearly and conspicuously articulate to their clients why one model suits one market and the other the other.
Bottom line?
The “Great Reset” has thrown down the gauntlet. Firms that were “sleepy” (a phrase I suddenly hear often, in different contexts) are wide awake and even startled. Our familiar world is going to look markedly different in five to ten years.
And it won’t necessarily be populated only by law firms. We face enduring competition from legal process outsourcing frims and perhaps, although who they might be have yet to be identified, other nontraditional providers altogether.
In the meantime, the watchword is: Agility.
