A glossy “Legal Review” magazine fell out of our copy the Australian. One of the articles suggested that Australia’s legal landscape was being “shaken up” by overseas law firms coming to Australia.
Well, that may well be, but I was left shaking my head as to the appeal of such firms to large commercial clients (who of course are the target clients for both well established and new entrant firms).
The same phrases kept coming up: profits per equity partner, meeting budgets, lateral hires/”turnover of partners”, internal ructions and “global integration”.
The starting point has to be that there’s only one source of profits in a law firm, and that’s from client billings. Yet we regularly read that increasingly savvy commercial clients are monitoring legal fees more closely than ever. Obviously there are competing interests here!
Budgets can only be met if there’s a good flow of work, and even then often involve outrageously excessive working hours for someone in the food chain – often on the part of more junior lawyers.
Lateral hires (and the associated turnover of partners) are disruptive to all concerned and always beg the question – was the person pushed (why)? Or did they jump (presumably for more money – see point about source of profits above).
The article honestly admitted that there have been internal ructions at a number of firms. That’s not surprising when the money involved is so great, but hardly in the interests if clients!
In short, the world of law firms has always been messy, and at this level, things don’t seem to have changed at all. Glossy magazines may portray a rosy picture, but clients beware!
I haven’t touched on “Global integration”. Now there’s quite a bit to say about this, so I’ll save it for a future post.