An investigation into what GCs really want from law firms
How do GCs assess law firms and what are their most important considerations? Chambers Global analyse the needs of GCs for both international and cross-border work.
What are clients looking for when considering law firms?
Chambers International & Cross-Border Capability research seeks to understand the various strategies and approaches of law firms and in-house legal departments when it comes to complex multi-jurisdictional work. Having a greater understanding of what clients are looking for helps to keep our rankings accurate and in line with current market trends; therefore earlier this year, as we kicked off the research period for the Global 2022 Guide, we reached out to Top 3 Legal's GC Hub Network of over 700 individuals from jurisdictions all around the world to gather their feedback on what factors they consider most important when it comes to choosing counsel for this type of work.
Chambers speaks to thousands of clients each year during the course of our in-depth research into the legal market. Here we compare those factors that which come up most frequently as important to in-house respondents, especially for sophisticated international and cross-border work.
Client Service comes out on top from this selection of factors, being important to clients for any engagement and, certainly, when it comes to more complicated cross-border mandates. This is also backed up through our traditional research;
"Not only are they a truly international firm with a deep bench of lawyers in several jurisdictions, these lawyers are able to coordinate work across offices seamlessly, such that client service remains superb."
Commercial Awareness also is shown to be a significant consideration, both through our result above and through our in-depth research.
"Commercial awareness is a massive asset to any transaction. Practical and logical arguments give our lawyers the ability to mediate between the various parties which really speeds up the process and adds a lot of value."
How important are costs to GCs when searching for providers of legal services?
There is less distinction between the next factors; Delivery to Budget and Sophistication of Work, weighted with almost equal consideration by our respondents. This is likely due to the two naturally going hand in hand, as clients tend to be more willing to pay higher fees the more complicated the matter is, as long as they feel they experience value for money, as we can from the following quote;
"Probably one of the most expensive firms but they do work in complex international issues. So it depends on the project."
Interestingly, this leaves Bench Strength to be shown as least important according to our responses. Perhaps with the understanding that if the rest of the factors are already covered, then Bench Strength either isn't an issue or is already taken care of.
"I have received their advice on a number of cross border issues involving multiple jurisdictions. Their capabilities and coordination have been first-class, and they have an excellent network staffed with high quality lawyers."
By breaking these results down by the size of the respondent's company we can review whether the importance of these factors vary according to a change in priorities.
As expected Client Service and Commercial Awareness still come top as the top and second most important factors for all categories.
Interestingly however, Delivery to Budget and Sophistication of Work swap places in importance for companies with less than two hundred employees showing that complexity is a key consideration despite their smaller overall size.
It is also interesting to note that while Bench Strength remains in 5th place across the board, the degree of this varies significantly depending on the company size. Given much less weight for the companies with under two hundred employees the others.
This demonstrates the need for law firms to be aware of the priorities of their clients and where possible tailor their approach to better meet those needs.
What GCs really value when working with firms
These are the results when we asked about the type of values that General Counsel look for when working with law firms.
Shared Company Culture comes top here, which will come as no surprise to anyone especially after the global pandemic and shift to remote working has put a spotlight on professional relationships and how teams interact and collaborate. In this environment, similar approaches and attitudes help ensure projects run seamlessly and so it is of the most importance, backed up by these results. It is also supported from feedback we receive as part of traditional Chambers research;
"They provide an excellent legal service but approach it from the insider perspective, as if they were a goal-driven legal department of the client."
There is less of a distinction between the next two factors. This is not to say that clients don't hold Team Diversity as an important factor, as it clearly still is;
"They seem to be very supportive, we believe in diversity, like to have firms who have/prioritise diversity and in retaining them we were happy to see all the initiatives they have on that front too."
But with many law firms on board with making positive changes, some clients have started to put more emphasis on the what they see as the next significant issue for law firms to address going forward, which our results indicate is Sustainability.
"The firm have their finger on the pulse and grasp the broader context of climate change policy they don't just have a narrow legalistic view of things."
How important is Pro Bono work and do GCs consider this when instructing firms?
Pro Bono still features as an important factor to clients, placing in a not too distant fourth but these questions were asked in the context of choosing counsel for complex international work, and so it would appear that factor has less bearing on that stage compared to the other values already discussed.
Again by reviewing these results based on the respondent's company size we are able to see different priorities and the varying degrees between the factors.
One interesting thing to note is that Team Diversity, while placed second for the smallest and largest sized companies, becomes the least important when looking at the results for those companies with between two hundred and five hundred employees. It is also worth noting that in the same grouping, Sustainability Practices becomes almost on par with Shared Company Culture, which is a factor that has a much more significant lead among the other company sizes. This would suggest that companies of this size are currently more sensitive to this issue.
The clear winner out of the above factors, is that clients appreciate Specialist Knowledge of their business and the sector in which they operate.
"Terrific from top to bottom; they have industry leading partners and a deep bench of associates who punch above their weight. The team is also aided by subject matter experts from all of the relevant disciplines and international offices that provide a global reach."
What is less clear, as there is not much difference in their overall score, is which approach clients favour when it comes to complex international mandates. The debate over which strategy is more beneficial has been long raging and our results show that although Large Global Footprint current comes out ahead of Network of Partner Firms, there is no clear preference of one approach over the other, meaning law firms and their prospective clients will have to continue to weigh up the pros and cons of which.
Strong Project Management Skills, while an key element of any successful engagement, is rated here as the least important this is likely due to it being a factor to be expected from any law firm involved in cross-border work, and therefore respondents place other factors as higher concerns.
A global view from General Counsels
The majority of respondents from the EMEA region but we also heard from leading General Counsel based across Asia-Pacific and The Americas. This useful as provides a wide range of perspectives and reflects the needs of clients in jurisdictions with differing priorities and requirements. For example, in a particular jurisdiction, a law firm may be included in a ranking table for its ability to act as co-ordinating counsel, while in another section, a practice may achieve a strong ranking for its skill acting on the local elements of larger international files.
As seen above the majority of respondents were from the EMEA region, but overall the numbers of instructed firms are actually lower than expected across the board. The reason behind this is likely be a shift in the market towards retaining a smaller panel of trusted law firms rather than having a larger panel with bigger variety of different law firms on it. We will look closer at the cross-border element in the next graph.
According to the results gathered from our respondents, interactions with law firms in the Asia-Pacific region tend to involve the most cross-border elements, at just short of 80% with the EMEA region in the mid 50%s and The Americans just over 20% of interactions. This could be seen as surprising given the presence of these jurisdictions on the international market but when you consider the inter-connectivity of the other regions, especially where they are important geographical hubs for certain type of work then it is easier to understands than local cross-border matters are much more common than Global mandates.
The greatest number of respondents came from companies with over a thousand employees, but we also gathered useful insight from companies with under two hundred staff members as well as those with between two hundred and five hundred employees. Therefore, as seen in the examples above, we are able to compare if what they look for in their legal representatives changes significantly based on their own size and needs.
Mirroring the results based on respondent's location, reviewing the responses by company size also reveals a trend of moving away from having a large panels of firms, instead favouring the true business partner approach.
This graph demonstrates that regardless of size, it does appear that those who are part of Top 3 Legal's GC network all belong to companies with international aspirations as both those with between two hundred and five hundred employees and those with over a thousand see around 50% of their interactions with law firms involve cross-border elements. It is also interesting to note, that perhaps somewhat unexpectedly, it is the smallest companies who have the greatest percentage of matters involving cross-border work. This will challenge law firms to not overlook marketing themselves to the smaller companies, as they can be sources of a lot of complex work.