Working as a lawyer has not been the same since the financial crisis. The heady days of the pre-recession boom years when City lawyers could increase their hourly charge rates with little or no resistance from clients have long gone.
Now law firms across the spectrum, from the Magic Circle to high street practices, are having to offer more flexible pricing models because clients know that there are too many firms chasing an increasingly small pool of work. Why is this? Some commentators, such as Richard Susskind, have long argued that there are too many lawyers, a sentiment we tend to agree with. Businesses are building up their own in-house legal teams which means that only specialist work is tendered to lawyers in private practice.
In addition, clients are shopping around for legal services. Meanwhile, some law firms are agreeing unprofitable rates in the hope that it will encourage clients to “buy” services at normal or higher rates just like the supermarkets do with loss leaders on basic products such as bread and eggs to entice you into the store. In short, clients are demanding more work for less money.
How are law firms dealing with this challenge? Some are resolutely sticking to prohibitively high hourly rates to fund lifestyles to which those partners in the larger firms have become accustomed. High hourly rates for certain very niche work may survive the legal sector’s equivalent of the Big Bang provided that the demand for this type of work exceeds the supply of lawyers specialising in one of these areas such as tax.
Many of the so-called medium to large sized firms are finding that they have to offer fixed fees, blended hourly rates and conditional fee arrangements for some work. Over the last few years, larger law firms in particular have merged because they see the economies of scale in having a presence perhaps nationally or across the globe. This means that levels of support staff can be cut and back office functions can be moved overseas or to cheaper locations. Herbert Smith Freehills has a document management and review centre in Belfast whereas not so long ago this work would have been carried out in expensive offices in London.
Despite some cost saving measures, the largest international law firms are still attached to an unsustainable business structure which has huge overheads such as offices in prestigious locations with expensive sculptures and modern art lining the walls of the reception. The partners at these types of firms often practice little law instead focusing on marketing whilst continuing to enjoy vast financial packages. Clients’ work is carried out by more junior lawyers who often have unrealistic billing targets which leads to individuals padding time and billing clients more than they should.
Bargate Murray is different from our larger rivals. We offer a partner-led, City service at much lower rates than our larger, London competitors. Partners actually work on your case rather than attend golf days. We charge reasonable rates and offer flexible pricing models tailored to clients’ budgets.
Please feel free to speak to Quentin Bargate about the services that we offer.