Barry JacksonWhen I first joined Herbert Smith from Arthur Andersen as head of business development, as part of the interview process I had to do a presentation to 20 senior partners on my approach to business development. That was back in 1998 and although the partners did not approve of PowerPoint, I passed.
It was at that presentation that I was first struck by the huge difference between accountants and lawyers. Coming from Andersens, where I had worked for more than 10 years, I was expecting lawyers to be overflowing with confidence and totally business savvy.
Instead, I found a rather disparate group of people who were totally absorbed by my presentation. Well, maybe not gripped, but at least they listened politely to what I had to say and asked some interesting questions. Apparently they liked what they heard.
My first impression was that although intellectually academic and willing to debate issues, lawyers are not at all commercial. Lawyers across the board are preoccupied by the law, sometimes at the expense of commercial awareness.
It surprised me that the law firm culture is so different from accountancy practices and this is why the race to get into the top band of legal service provision – the yet to be named 'Global 10′ – will be fascinating for the in-house lawyer to watch.
First, let's look at the market. It is booming, particularly in New York and London, which are still the two key legal centres and essential to any global network. This is one point to the law firms, as none of the accountants yet has a serious legal presence in either city.
Law firm charge-out rates (and profits) are still robust – especially for the major players. Lawyers are increasingly perceived as being as crucial as investment bankers to M&A/selloffs/planning and development. Another point to the law firms, as they definitely have the lion's share of the work.
Law firms also win on the European front. With strong London practices, many major UK firms have hooked up with their German counterparts and are well placed for European work. A number of the big US firms also have strong international networks – albeit generally staffed and run by Americans to serve American clients. So, fourth point to the lawyers.
But despite the strength of the law firms, at least two or three accounting firm-based legal networks are acknowledged, certainly by some clients I have spoken to, as worth watching while they 'wait in the wings'.
There are a number of reasons for this. Lawyers in firms tied to accountancy practices will learn from the way the accountants and consultants do business. This is good for clients because it provides more choice. So, one point to the accountants.
If big is attractive, it is definitely a second point to the multi-disciplinary accounting-based firms. So that leaves the score at lawyers 4, accountants 2.
But, the crucial reason for a shift to the tied firms is that clients are more demanding. Corporates are now tougher on their in-house legal departments in terms of budgets and the whole procurement process is becoming more of an issue – particularly for multinationals. All in all, it is getting more competitive. In my experience, accountants like these conditions.
In a rapidly changing environment, lawyers will need to gain new skills. It is no longer enough to be a great lawyer -that is now a given – they have to become more commercially aware.
A good lawyer needs to be able to build relationships, be commercial, be tough, manage teams, delegate, know how to bill effectively to manage fees, develop their assistants (the business lawyers of tomorrow who will need different skills from the partners of today) and crucially, understand how to work with other professionals. And the big law firms are not good at this.
Ultimately, the deciding factor in the battle between law firms and accountants is about who is best able to understand the client's needs. What counts is not which of the accountants or lawyers has the biggest this, or the newest that, but who can learn
to better understand, and respond to, what the buyer of legal services wants from their advisers.
In my experience clients are changing. In today's market they want more proactive and commercial advice, less legal egotism, more consultative relationships, lawyers who can communicate with non-lawyers, more listening and less talking. They need lawyers who have a sound knowledge of and interest in their clients' businesses.
There is a long way to go before clients can say which is better – the accounting firm's legal arm or the traditional law firm.
But it is down to the client and if I were a buyer of legal services the first firm I would dump is one that calls its client care 'client management'.
Barry Jackson left Herbert Smith earlier this year and is now a freelance business development adviser, specialising in client-base development, to professional services firms.