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There are two important, not entirely unrelated topics that run throughout this issue - law firm profits and how in-house lawyers (IHLs) are spending their increased legal budgets. Law firms’ 2006 financial results show a third consecutive year of record turnover, often above 15%. This may not translate directly into profit, although the figures indicate that some firms increased turnover with the same number of lawyers. Reading between the lines, a gap may be opening between firms with tight management and those without.
A lo largo de este número aparecen dos temas clave y no del todo contrapuestos – por un lado, los beneficios de las firmas de abogados y por otro cómo los abogados internos de empresa están invirtiendo sus presupuestos para temas jurídicos. Los resultados financieros de las firmas de abogados en el 2006 reflejan un récord de facturación por tercer año consecutivo, en muchos casos por encima del 15%. ¿Puede estar el incremento de externacionalización del trabajo legal por parte de las empresas detrás de estos excelentes resultados? Gracias a una serie de recientes In- House Forums organizados por Iberian Lawyer, se han debatido cuestiones clave para los directores de departamento jurídico de empresa. Parece que la tendencia es la de gestionar sus equipos reducidos de abogados internos y delegar a la práctica privada externa. ¿Qué significa esto para las firmas de abogados de la Península Ibérica? Pues para el actual “boom” de fusiones y adquisiciones, no demasiado pero, cuando el actual ciclo llegue a su fin, será un reto para aquellas firmas que normalmente rechazan trabajo rutinario frente a instrucciones de mayor envergadura y más rentables.
Is increased outsourcing of legal work by companies behind these excellent results? A recent series of Iberian Lawyer In-House Forums examined the key issues for Heads of Legal in running their teams and delegating work to private practice.
Costs are a big issue. Perhaps the hourly rates charged are less important than the way costs are managed. Most IHLs agree they have to use leading external lawyers on major corporate activity - and that it is expensive. More of a problem is the way costs, and particularly changes in costs, are communicated. The IHL message to law firms is clear - keep to budget estimates, manage expectations and no surprises, please!
Indeed, there may be a cultural gap between IHLs and their law firms. Lawyers at one IBEX-35 company told me they are most uncomfortable calling up law firms to evaluate their expertise and discuss fees.
For the future, there are some indications that Iberian companies are set to follow the traditional Anglo-Saxon approach - a small internal team controlling outsourced work. That would mean passing out all the routine business to save money, and sending premium value work when the internal team cannot service it.
What difference would that mean for Iberian law firms? Not much in these M&A boom times, but when the current cycle ends, it will be a challenge for those firms who habitually turn away commoditised and routine business in favour of more profitable, high-end instructions.
Moray McLaren
Editor
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