Hello, and welcome to the first installment of a recurring blog, where I hope to share my transatlantic point of view on the legal sector, legal marketing and legal communications.
I suppose it’s ironic this blog launches on the 4th of July –when Americans celebrate the country’s anniversary of declaring independence from Great Britain. However, some 240-plus years later, the two countries couldn’t be more intrinsically linked.
Where one nation moves, the other reacts – true in business circles and also in the geopolitical realm. And as we legal communicators like to say: the law lives in the centre of business and politics. In this space, I’ll be following and commenting on the issues that cross the Atlantic, as it relates to the business of law and legal communications.
As many Americans today are awaiting 4th of July celebrations, complete with the requisite fireworks display, the fireworks on this side of the pond are being made by big US law firms creating a dramatic shift in the legal landscape.
Massive law firms based in the US are on a hiring spree in London, armed with the promise of bigger salaries and access to American clients in growth areas such as private equity and white-collar crime. In increasing numbers, star partners and teams are making the move, many away from the traditional “Magic Circle” – the elite London firms known for the most high-profile cases and deals.
The statistics are eye-opening
In 2017 alone, 109 partners left UK firms to join London offices of US firms.
While the money and prestige are appealing, many more are swayed by the compensation models and opportunities for growth offered by US firms. The remuneration model most popular in UK firms is the “lockstep” model, where income levels rise steadily to a cap after 15 to 20 years of partnership. In contrast, most US firms operate a performance-based system (more crudely referred to as “eat what you kill”) that rewards star lawyers on the fees they generate.
While UK firms argue the lockstep platform encourages collegiality and means clients get the best from the firm advising them and not just the relationship lawyer, the meritocracy model employed by US rivals is attractive for the best and brightest in London to make more money and to realise the value they bring in to the firm.
What does this mean for the legal market in both countries?
In the UK, the expectation is for competition to increase for talent between top US firms and the Magic Circle and large legacy UK firms. To wit, many UK firms have adjusted their pay scales and remuneration models to more closely mirror US firms. We are also seeing new approaches, with many law firms eschewing the partnership model in favour of going public, and other new entrants to the market creating structures whereas their lawyers act much like independent contractors with a stake in the business.
In the US, many firms view the UK as a natural platform for international growth aspirations. Additionally, it more closely aligns their service offerings to existing global clients who may otherwise seek other law firms in Europe who can handle the jurisdictional matters on their own turf.
For law firm leaders and communicators, this trend underlines several key points in navigating these rough waters.
For US firms entering or expanding in the UK, it’s important to understand the market differences. As previously mentioned, compensation models differ between the two markets, so being very clear with new arrivals the expectations and opportunities will smooth the transition and help the firm enjoy success earlier. It’s also important to know the influence of the legal press in the market differs greatly from the US and requires a sensible and proactive approach to media relations.
For UK firms, be willing to adapt to the new landscape. If partners are attracted to the pay models offered by US-based competitors, it’s worth the time to look at your current compensation structure to implement merit-based salary raises that reward star lawyers. Additionally, where US firms lag in media relations with the legal press, they tend to be more aggressive in pursuing coverage in the business media about work done in the UK. Jokes about American self-promotionism aside, that kind of visibility around prominent work is a point of pride for lawyers and can be a useful recruiting and retaining tool to stave off advances from US firms.
Uncertainty breeds opportunity
As this evolving dynamic creates a host of questions (How will we implement a new pay model across the firm? What do we tell our clients about losing five key partners last month? What is our value proposition as we enter a new market?), it also offers tremendous opportunities.
Leaders and communicators too often rely heavily on the “promotion” side of the marketing equation (The four P’s: product/service, place, pricing and promotion). In other words, what do we say to seize an opportunity or meet a challenge?
It’s also a time to look at the other pieces of the marketing strategy puzzle. Is there an innovative new structure that allows for compensation that rewards success and keeps clients happy? Can we use technology to deliver services more efficiently so more resources can be freed up to more competitively compensate star performers? Is there a logical merger partner (legal or non-legal) that allows us an enhanced platform that will attract and retain top lawyers, enter new markets, and grow our service offerings to clients?
Done well, this new strategy could lead to happier clients and partners and help grow your business. Then you’d have a myriad of stories to tell.