On the afternoon of Wednesday 23 September I will be moderating a panel (3:30 pm – 4:30 pm) on “The Law Firm of Tomorrow,” which will include Charles Martin, Senior Partner, Macfarlanes; Darryl Cooke, Managing Partner, Gunnar Cooke; and Sara Morgan, Head of Sales, Axiom.
We have been conferring and have come up with a few questions we plan to take on during our session. I won’t reveal all but in the spirit of hoping to inspire thinking in advance (whether or not you’ll be attending in person), here’s one of those questions:
Can a single law firm operate at different price points under one brand? Stated alternatively, can a single firm provide routine services at competitive prices while also taking on the most high-stakes, boardroom level attention, engagements?
To me, it’s self-evident why the answer to this question could be of pressing interest. All that’s required is that you believe there’s more than a bit of truth to the following about the high end engagements:
- Many firms declare that they aspire to do the high-stakes work, but there isn’t going to be enough to go around for all the aspirants. That work is in fact just a sliver of the overall global legal spend.
- Not only is there not enough ultra-high-end work to satisfy the hunger of all firms who say they’re pursuing it, in fact the list of firms in the consideration set of sophisticated clients for such works is getting shorter and shorter. And the hurdles for firms not already on those short lists to place themselves there some day are becoming insurmountable.
Turning to the value end of the demand spectrum – although I prefer to use the phrase “economical end” since I devoutly believe value can be delivered at any and all points of the food chain – how good are conventional law firms really at providing (a) routine services (b) at competitive prices (c) with consistent and superb quality (d) in a way that makes clients eager to come back for more? I fear the question answers itself.
Have I set too high a bar for firms to meet at this end? I can hear the responses already:
- “We don’t do routine.“
- “We have to cover our costs plus allow for a livable profit margin—and we don’t have real competition in any event.”
- “Of course we aspire to deliver superb quality; that’s essential to our firm’s nature. But can we help it if not every one of our colleagues is at the top of their game every day of the week?”
- “We’ve tried client relationship management, client teams, client business plans, and all of that; at the end of the day it comes down to personal relations and none of this top-down stuff.”
I’m not trying to be facetious, just realistic.
Now, we have seen a large variety of firms—famously starting over a decade ago when Orrick launched its “Global Operations Center” in Wheeling, WV—start operations in lower-cost centers, and the trend shows no signs of abating. Lest you doubt me, in no particular order: WilmerHale has done it in Dayton, Ohio; firms like K&L Gates and Bryan Cave have taken advantage of having a large presence in intrinsically low-cost metropolitan centers (Pittsburgh and St. Louis, respectively); and in the UK Allen & Overy has Belfast, Ashurst and Pinsents and others have Glasgow, and Freshfields has Manchester. More are surely in the works.
But are these investments changing the competitive playing field or simply sound management hygiene? My vote is with the latter. Please, I urge you, do take advantage of labor arbitrage: There’s no reason for back office functions to be conducted on Sixth Avenue in Manhattan or California Street in San Francisco. Do not kid yourself, however, that you have changed the game. Extremely similar, if not the very same people are doing almost exactly the same things in the same way but zero to two timezones and hundreds or a thousand miles removed.
A moment ago I mentioned Allen & Overy. Their ambitions in Belfast, and now Hong Kong and soon, surely, elsewhere, far exceed “labor market arbitrage.” They have launched Peerpoint, which they describe publicly as “global, flexible resourcing” but which is the first most conspicuous move into trying to house the high/low ends of the spectrum under one firm’s brand.
So staying within the boundaries of Law Land, the short answer to the question is “we don’t know yet.”
Fortunately, we are not without examples from the rest of the economy.