{"id":433,"date":"2019-08-16T12:17:50","date_gmt":"2019-08-16T12:17:50","guid":{"rendered":"http:\/\/insight.thomsonreuters.co.nz\/?p=433"},"modified":"2023-03-13T02:41:05","modified_gmt":"2023-03-13T02:41:05","slug":"midsize-firms-flexing-competitive-spirit-with-large-law","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.co.nz\/legal\/posts\/midsize-firms-flexing-competitive-spirit-with-large-law","title":{"rendered":"Midsize Firms Flexing their Competitive Spirit with Large Law"},"content":{"rendered":"\n

To say that large corporate clients have historically been reticent to work with smaller to midsize law firms would be inaccurate. There is simply no evidence that larger clients choose to work with larger firms more often or that smaller clients prefer smaller firms, argues Bill Josten from the Thomson Reuters Legal Executive Institute.<\/h4>\n\n\n\n

As you analyse the actual statistics behind what size of law firm major clients choose to work with, it can be a bit surprising how often large companies are choosing midsize firms for matters such as litigation.<\/p>\n\n\n\n

Using data compiled from Thomson Reuters Monitor Suite, the Legal Executive Institute conducted an analysis of what size law firm has handled litigation matters for Fortune 50 companies going back to 2014. In 2014, just shy of 29% of Fortune 50 litigation matters were handled by firms with between 16 and 250 solicitors\u2014 and that number has been on a relatively steady increase ever since.<\/p>\n\n\n\n

By 2018, midsize law firms\u2019 share of Fortune 50 litigation had grown to more than 36%. And this had occurred at a time when the total volume of litigation matters has generally been declining. In 2018, Monitor Suite reported more than 58,000 total litigation matters, down from just more than 78,000 matters in 2014, representing a decline of more than 25%. Midsize firms are capturing an increasing share, even in a declining market.<\/p>\n\n\n\n

What might be driving the growth of midsize firms?<\/h2>\n\n\n\n

There are likely several reasons.<\/p>\n\n\n\n

First, midsize firms are often viewed as more cost effective. Large firms usually come with a large price tag, although clients are comfortable paying that cost when the work warrants. But not all the time. Data from Thomson Reuters Peer Monitor<\/a> shows that for most of the past five years, not only have Am Law 100 firms had the highest average billing rates, they\u2019ve also been the most aggressive about driving rate growth.<\/p>\n\n\n\n

Going back to 2016, average worked rate growth among Am Law 100 firms has beaten the market average by at least 0.4%, and in some years by more than a full percentage point. Clients looking for more cost-effective alternatives would understandably look to midsize firms whose average rates are already lower, and whose rates grow at a slower pace year-over-year.<\/p>\n\n\n\n

Second, midsize firms may not have the same infrastructure, but that doesn\u2019t mean they\u2019re lacking in expertise. Over the past several years, the legal media has been replete with stories of high-profile partners from major law firms moving their practices to midsize firms, or in some cases even starting their own midsize law firm. Experienced solicitors can build expertise in their practice that would rival the depth of that at much larger firms that carry a much higher price tag, particularly among midsize law firms that focus on one or two specific practices rather than those that would position themselves as \u201cgeneral service\u201d or \u201cfull service\u201d firms.<\/p>\n\n\n\n

And finally, it may be a function of a fundamental shift in how legal service is provided. For such providers, whether they be law firms, in-house legal departments, or alternative legal service providers, we\u2019re rapidly approaching a point in time where headcount no longer equals capacity. What I mean is, the amount of legal work a provider can produce is no longer as dependent on the number of timekeepers it employs, as it was in the past. A decade ago, a legal department of 10 lawyers could theoretically increase its capacity by 10% by hiring another lawyer. In today\u2019s market, that same department can increase the working capacity of every solicitor within the department by examining workflows and introducing solutions that improve efficiency and optimize the productive output of each contributor.<\/p>\n\n\n\n

In this way, midsize firms are not necessarily at a disadvantage to larger firms in terms of the amount of work or complexity of matters they can handle, even with smaller headcounts, if<\/em> those midsize firms have made strategic investments in their workflow that allow their solicitor to be more productive and efficient.<\/p>\n\n\n\n

Obviously, the reasons why some midsize law firms have been increasingly successful in competing with larger players in the market will be as varied as the firms themselves. But important lessons can be learned from those firms, and those lessons can help midsize law firms of all stripes.<\/p>\n\n\n\n

This article was originally published in the Legal Executive Institute<\/a>, which brings together people from across the legal industry to ignite conversation and debate.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

There is simply no evidence that larger clients choose to work with larger firms more often or that smaller clients prefer smaller firms, argues argues Bill Josten from the Legal Executive Institute.<\/p>\n","protected":false},"author":62,"featured_media":434,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[509,510,2,3,451,461,8,513,486,13,500,503],"tags":[76,233,241,287],"insight_job_role":[487,498],"insight_practice_area":[453,455,456],"class_list":["entry","author-legalexecutiveinstitute","has-excerpt","post-433","post","type-post","status-publish","format-standard","has-post-thumbnail","category-benchmarking","category-billing-and-invoicing","category-business-development","category-business-efficiency","category-career-development","category-document-automation-and-management","category-law-firm-marketing","category-legal-commentary-and-opinion","category-marketing","category-opinion","category-strategy-and-business-development","category-succession-planning","tag-business-devlopment","tag-large-law","tag-law-firms","tag-mid-sized-law-firms","insight_job_role-partner","insight_job_role-senior-executive","insight_practice_area-commercial-law","insight_practice_area-company-law","insight_practice_area-competition-law","hentry"],"acf":[],"yoast_head":"\nMidsize Firms Flexing Competitive Spirit with Large Law - 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