The balance of power has shifted, says top academic
The stereotype of the corporate lawyer as the intellectual and highly paid hotshot who is respected by all is under threat, as new research by a top legal academic shows City law firms’ clients are routinely asking the impossible — and getting away with it.
An oversaturated legal market, which has already seen a host of mergers, has left desperate law firms willing to do almost anything to satisfy increasingly outrageous demands, reckons Birmingham University’s Steven Vaughan.
Three-quarters of the 53 lawyers interviewed for Vaughan’s study said they were forced to accept more challenging terms with little room for discussion, with many noting that the “balance of power had shifted” from firms to clients.
Big corporations and financial institutions were identified as the bosses in the new emerging order, which has formed largely since the 2008 financial crisis. It is defined by terms of engagement outside the control of ever more submissive law firms.
Sometimes, the study suggests, big banks are even weighing in to decide which law firms advise other parties on their deals.
The research highlights specific areas where things have changed. They include restrictions on who law firms act for — with some leading clients now barring firms from representing other companies.
Faced with the threat of losing the big client, increasingly meek partners are obediently following orders — meaning they are losing work and as a result probably have to push their junior associates even harder.
Another area is freebies. Rather than pay for tax advice, corporate clients are making firms responsible for providing this extra on a “non-negotiable” basis. Giving the advice often involves all sorts of checks on anti-corruption rules that the law firms really should be charging for. Again, this translates as longer hours for the worker bees.
Birmingham University’s study comes amid a wave of recent City law firm pay rises, as top practices battle to keep hold of associates who have become disillusioned at the long hours and stress of their jobs.
The problem seems to be getting worse, with research conducted over the summer finding that millennial lawyers are getting sick of their jobs even faster than previous generations.