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'Challenger' global brands 'outperform' traditional law firms

Revenues have grown 149 per cent faster than average global 100 firms in the past four years, research finds

1 October 2013

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By Manju Manglani, Editor (@ManjuManglani)

Forward-thinking, client-focused and global law firms that strengthened their brands during the downturn have substantially outperformed traditional law firms, new research suggests.

It found that ‘challenger’ firms like Kirkland & Ellis, DLA Piper, King & Wood Mallesons, K&L Gates and Gibson Dunn achieved average revenue growth of more than double that of the average rate among the global 100 firms.

Each of these firms achieved 22 per cent average revenue growth between the 2009/10 and 2012/13 financial years. Meanwhile, traditional legal powerhouses Clifford Chance, Slaughter and May, and Skadden averaged only a five per cent increase in revenues since 2009, the report says. By contrast, the global 100 achieved average growth of nine per cent over the same four-year period.

Published in Sharplegal 2013 Global Elite Brand Index, the Acritas research findings are based on responses from 815 senior general counsel in $1bn+ revenue multinational organisations.

The report notes that, among the top 20 brands that have consistently gained strength over the past four years, the “ones to watch” are: CMS; Dentons; Latham & Watkins; Norton Rose Fulbright; and Reed Smith.

Increasing brand recognition

Newer brands generally monitor clients’ needs and satisfaction levels more closely than established firms and are consequently in a better position to offer valuable solutions, the report suggests.

They also adapt more quickly to changing market conditions and combine marketing efforts across offices to build their profiles, thereby reaping the rewards of greater efficiency, it says.

“For these firms, the fight for brand recognition is of paramount importance, central to winning business and as critical for the Chicago office as it is for the team in, say, South Africa or Singapore. A firm that has a strong and united brand across the world is in a naturally strong position to win work.”

For DLA Piper, King & Wood Mallesons and K&L Gates, international growth through mergers and acquisitions played a significant role in strengthening their brands and revenues, according to the report.

Kirkland & Ellis and Gibson Dunn, which were also highlighted as having rising brand strength and revenues, achieved a comparable market status to the former three firms without high-profile mergers, the report notes.

According to the research, the clearest differentiator among this fastest-growing group is their global footprint and high proportion of clients with international needs.

Creating a ‘challenger’ brand

‘Challenger’ law firms provide ‘the ideal solution’ to organisations looking for high-quality expertise, value for money and client-oriented service, suggests Lisa Hart Shepherd, CEO of Acritas.

“These ambitious firms are proving to be more engaged and in tune with clients’ current and future needs as well as being mindful of their pressurised budgets,” she says. “The resultant offering is compelling and poses a formidable challenge to the established order.”

Allocating plenty of time and resources to integrate marketing functions is key to achieving a consistent brand across a firm that undertakes growth by merger, say Jeff Berardi and Debra Woodman in a Managing Partner case study on the combination of K&L Gates and Middletons’ marketing functions.

“An extensive action list was created and used by the joint marketing teams, which assigned specific people to drive key tasks and assisted the two firms in remaining focused on the urgent action items required to be completed for 'day one' of the merger,” they recall.

King & Wood Mallesons’ global managing partner, Stuart Fuller, also noted in a recent Managing Partner interview that stringent integration processes are vital to growing a firm by merger.

"Each of the workstreams is broken down on a piece of paper with a project plan for every week between 31 July and 1 November, with deliverables that need to be hit for each of them. Then we have a weekly meeting of the key people to go through each of those workstreams," he said of his firm’s upcoming combination with SJ Berwin.

The soon-to-be global firm’s growth ambitions are strongly tied to its perception of clients’ needs. "I think there's a trend at the moment in terms of firm branding and how clients look at firms, and it's now much more about consistency, capability and geographic coverage than just a purely quality point,” said Fuller. “It's very difficult to differentiate on quality alone; you need to have more than that. I think you need to have something that's genuinely different.”

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