Law firms sharpen up as recession cuts legal sector to size

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A new report warns law firms that they need to modernise or lose out as a major power shift is taking place in favour of the in-house client.  The report, which canvassed the opinions of 130 General Counsel and 80 law firm partners around the world, reveals that 78% believe that the recession will have a lasting impact on the profession, and that value and efficiency are now the non-negotiable attributes a client looks for in a legal partner.

The report – ‘Law firm of the 21st century – The clients’ revolution’ - commissioned by international law firm Eversheds, also reveals that the recession has had a major impact on how ‘magic circle’ law firms are viewed, with just over half (51%) of clients and 46% of partners citing the term as defunct.  When asked if this revision, to the traditional law firm hierarchy would be a welcome development for the market, an overwhelming 94% of clients and 81% of partners agreed. 

While the recession has proved to be a key catalyst for this change, the report also highlights several other factors that have contributed.  The primary factor identified by over a third (37%) of all respondents was globalisation, particularly the move to the East, with many international law firm leaders, as with other business sectors, considering moving their headquarters from the West to the East.

An additional driver for change is the increasing status and professionalism of the in-house lawyer (35%).  Three-quarters (74%) of General Counsel said they now occupied a far more senior commercial advisory role in their companies compared to before the recession, with 55% assuming more responsibility for corporate governance. 

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