Betting on in-house – can corporate moves into legal services win credibility?
"At a time when in-house advisers are under growing pressure to demonstrate their worth to the wider business, why not try to leverage skills already housed within the department to make a profit from external clients or make new inroads where they know they have a ready made client base to serve?"
March 07, 2013 at 07:03 PM
3 minute read
As news broke this week of yet more attempts at law firm consolidation, with Nabarro and Addleshaw Goddard admitting they recently discussed a tie-up that could have created a top 20 firm with revenues of more than £280m, it is not just private practice attempting to push through change.
Buoyed by the Legal Services Act, the in-house community is now getting in on the act. This week saw construction group Carillion and telecoms giant BT confirming plans to team up with their own external advisers to service clients alongside each other, and it seems unlikely they will be alone in their ventures.
In the case of Carillion, its partnership with Clarkslegal to provide employment law advice to businesses and individuals is unlikely to have many wider ramifications. But its decision last year to force panel firms such as Slaughter and May and Linklaters to channel low-cost commoditised work through Carillion's own legal services arm is likely to have a greater impact – not least on how firms look at using their own legal services centres or outsourcing agreements.
Similarly, BT Law's plans to partner with its panel firms to cross-sell its low-cost services to advisers' clients – and vice versa – marks both another shift in the dynamic between corporates and their law firms and the growing control they are exerting.
And why not? After all, at a time when in-house advisers are under growing pressure to demonstrate their worth to the wider business, why not try to leverage skills already housed within the department to make a profit from external clients or make new inroads where they know they have a ready made client base to serve?
However, it is not a strategy without its own challenges. These companies will need to win over rival corporates and convince them that not only do they possess comparable expertise as law firms, but that the advice they provide can be genuinely independent.
Both are areas where they could struggle. While forthcoming Legal Week research shows more than a third of corporates would consider setting up similar legal ventures of their own, far fewer would actually be willing to use such an offering by another company due to doubts over quality and independence. To give some indication of just how much convincing rival corporates will need, only 20% said they would be willing to try out such a venture, with a similar percentage determined that legal advice should come only from law firms.
But while it may not be an easy battle to change mindsets in the short term, there's no reason why it won't succeed in the longer term. The legal market has seen unprecedented change in recent years – and this is just the next step.
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