Editor's letter: Into the ring

The recent news that Pinsent Masons will be launching freelance legal service Vario ?to “plug a gap” in the legal services market would seem to indicate that it has found ?a niche for itself. However, the fact that Berwin Leighton Paisner launched a similar client service (Lawyers on Demand) in 2009, as did Eversheds (Agile) in 2011, suggests that Pinsents’ new offering is not entirely original.

Meanwhile, legal process/service outsourcing providers are adapting and learning from both law firms and general counsel to develop new business models that are responsive to the needs of companies with international interests. They are observing how numerous law firms are struggling with inefficient processes, change-resistant business owners and high overheads, and realising that they have no such difficulties to prevent them from effectually meeting client needs.

It’s not just outsourcing providers that are eyeing these weaknesses in the market incumbents and starting to plan long-term strategies around them. In the UK, applications to form alternative business structures continue to be submitted to the regulator which, by some accounts, still has a large backlog of licences to approve. It’s only a matter of time before some of these new entrants pose a significant threat to established law firms because they have built their business models around client needs (rather than partner wishes) and based on best management practices (rather than owner consensus).

Some law firms have been focusing on gaining critical mass to stand out amongst existing and future competitors. As the February issue of Managing Partner highlighted, several high-profile mergers have been agreed over the past few months to create large global firms (including Norton Rose Fulbright and Dentons). The basic idea is that the bigger the firm is, the more talented its people are and the more places it is in, the better are its chances of prevailing in the contest for the top legal prizes. And, judging by what general counsel say they want – legal advisers with a global footprint and a strategic client-focused approach – this would certainly seem to be an effective strategy.

While firm size, talent and location are clearly key factors in winning new work from multinational organisations, it’s never a good idea to underestimate the nimble, quick-thinking and fast-footed upstart. It may be competing well below the weight of a global law firm, but that doesn’t mean that it can’t catch the larger firm by surprise and win the prize fight.

Until next time,