The pros and cons of the global law firm

The make-up of in-house legal departments is evolving – and so too are their relationships with external counsel.

Legal leaders have been advocating the value of the in-house legal function for years and, more recently, there's been a rise in demand for legal counsel across organisations. To manage growing workloads, legal teams are bringing more expertise in-house – more than half (56%) of respondents from a 2023 LexisNexis survey of 200+ in-house legal counsel said they expect their legal team to grow in the next one to three years.

In-house legal departments are also turning to their law firm panels to help meet their growth objectives, says Penelope Warne, senior partner at the UK office of international law firm, CMS, which has 78 offices spread across 40 countries.

"The evolving role of the in-house lawyer means law firms are being looked to aid in the development and growth of in-house teams," she says.

For organisations operating across multiple markets and jurisdictions, an international law firm is often the first port of call, says Mark Smith, director of strategic markets at LexisNexis.

"It's not just detailed knowledge of local law that these firms offer. It's the "boots on the ground" insight, connections, influence and deep understanding that a locally qualified lawyer practising remotely may lack." 

Working across jurisdictions? Read our International Law Q&As for quick answers and detailed practice notes

Yet many firms claim a global presence, which begs the question – can one single law firm really give you access to the very best lawyers across all jurisdictions and practice areas?

"Experience tells me that it’s nonsense – I think many firms believe it though," says Andy Cooke, general counsel of business travel platform, Travelperk, which employs over 1,000 people.

Cooke recounts a time where he issued a panel request for proposal (RFP) offering global firms the opportunity to bid in territories (for work inherently linked to a territory, like real estate and litigation) or specific risk verticals (like privacy).

"We told firms beforehand: you say you’re world-class at everything, but you’re not, so don’t bid on everything. Of the 36 firms we went out to, 14 tried to take the whole lot; and when we pointed out we’d advised them not to, eight came back and said: we’ve thought about it and, actually, we are definitely world-class in everything. Madness.”

Read: Law firm management—a look at international practice and speciality

Natalie Salunke, the general counsel for consumer credit provider, Zilch, says the international reach of a global firm appeals to her, and it can make life a lot easier, too.

However, it still depends on market factors, says Salunke. "Just because a law firm has an office somewhere doesn't always mean it has the greatest calibre of people or the breadth of different experiences in that office," she says, pointing out that lawyers often feel obliged to refer work to colleagues in overseas offices even when they know they're not at the same level.

“I think it comes down to that age old issue – do you buy the law firm or do you buy the people in the law firm?" she says. "Just because the law firm has a great reputation, doesn't always mean every single lawyer is exceptional.”

As an alternative, Salunke says many in-house legal teams turn to the so-called "best friends network" when seeking out international legal expertise.

"You've got subject matter experts in the home law firm seeking out people in other countries who they're happy to stake their reputation on.”

Firms without an extensive global reach wanting to retain the complex, high-stakes cross-jurisdictional work must service client needs through other means such as the "best friends network", says Smith, who held several private practice and in-house roles before moving into market strategy.

"Providing a consistent, high-quality service across multiple offices is not easy, even for a firm with multiple levers of control. Yet whether the firm is international or national, doing so is critical and will shape the winners and losers in the global arena."

This is why a growing number of companies are turning to the Big Four accountancy firms – all of which offer legal services with a global reach.

David Wilkins, Lester Kissel Professor of Law at Harvard Law School, says: “The Big Four can offer a far higher integration of technology, project management and process management; they employ a huge number of people across a huge range of specialties and they are way more global than even the most global law firm."

Read LexisNexis' investigative report on the legal services offered by the Big Four

Dechert is a truly international outfit, with 21 offices worldwide and a significant proportion of its client work spans across multiple jurisdictions and practice areas of the law.

Yet the firm takes a strategic approach to the areas of the law and jurisdictions it covers based on client demand, says the firm's chair, Andrew Levander.

"A global platform provides clients with access to teams who possess local knowledge and expertise but who can consult with their counterparts in other parts of the world to most efficiently and effectively support clients", he says.

“This doesn’t mean being all things to all clients but attracting and retaining the best talent to deliver the services needed by clients and in the specific jurisdictions and areas of critical importance that they need the support.”

The ability to offer a high calibre of legal experts across multiple jurisdictions differs firm to firm, yet many in-house counsel are being drawn to global firms for their specialist expertise.

When we asked in-house lawyers specifically how their teams will grow, just under a half (46%) of respondents said they believe in-house roles will become more specialised, and a third (33%) said they think in-house teams will rely more on flexible resourcing for specialist expertise.

While these findings reveal how legal departments are developing internally, it also hints at how their needs from external counsel have changed.

"As markets become increasingly complex and inter-connected, clients require the integrated capabilities of highly specialised practices and industry sector expertise," says Levander.

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Robert Shooter, managing partner of European law firm, Fieldfisher, has noticed a similar trend. "In-house counsel have become even more sophisticated, and want more specialist, sector-specific advice," he says.

According to Shooter, the European firm has increased its sector specialisms in recent years by hiring and nurturing leading specialists across its 25 offices.

One example of an area of specialist knowledge that's taken the in-house legal world by storm is the corporate world's increased interest in ESG initiatives.

Clients now expect their outside counsel to be well-versed in this relatively niche area of the law, says Mike Francies, managing partner of Weil, Gotshal & Manges' London office.

The firm, which has a 1,100+ strong team of lawyers globally, is currently working with University of Oxford’s Saïd Business School to create a specialist ESG-focused training programme for its London-based lawyers to help guide clients through ESG-related challenges.

"The purpose-built programme will cover the role of ESG in investing, reporting and metrics, ESG-linked financing, sustainable finance, and future trends affecting all areas of our clients’ businesses," he says.

Read LexisNexis practice notes and precedents on ESG and sustainability

As a result of recent geopolitical happenings, such as the pandemic, the war in Ukraine and various other economic events, many firms have also adjusted their approach to tackling projects.

Morgan Lewis, which has over 2,200 lawyers and legal professionals across more than 30 offices and 10 countries, has reimagined how its lawyers collaborate by implementing a “SWAT Team” style task force to tackle workloads.

"We form around a single issue to create swiftness and dexterity while bringing to bear the resources and proficiency of a global law firm to deliver an innovative client service," says Frances Murphy, partner and managing partner of Morgan Lewis's London office.

Having a global reach across multiple jurisdictions is something clients have sought after from their law firms for generations now. While this is still of use, clients have become more strategic in how they're working with external counsel – with a growing number reaching out for the niche knowledge they cannot source internally. As a result, law firms are now expected to house a host of sector and practice area specific specialists, which will be achievable for some but not all.

In-house lawyers are under mounting pressure to do more with less – and their rising workloads and stagnating budgets means many are turning to legal technology for help.

Some of this pressure is driven by CFOs who are trying to reduce the total cost of the legal function, and some of it comes from the growth of legal operations teams, says Warne from CMS.

According to the LexisNexis survey of in-house lawyers, more than half (52%) said their teams will hire more 'non-legal roles' such as legal operations experts, project managers or data analysts in the next three to five years.

The key driver for legal technology adoption among in-house legal departments is to increase productivity. However, there is a growing appetite to bring in technology that decreases legal department's reliance on external counsel – almost half (43%) of in-house lawyers admitted this was the case.

Law firms have been tooting their own horns about their tech investments for decades. In truth, many have been slow off the mark.

A Solicitors Regulation Authority (SRA) survey of 900 law firms in the UK found only 37% are currently using legal technology.

Yet even a quick look at the technology on offer at the top law firms will confirm they're in a league of their own. In fact, many of the firms we spoke with seemed to be early adopters of legal technology.

Alongside investing in sturdy internal infrastructures, many have developed tech-as-a-service offerings that enable clients to access tools and products that can deliver legal services faster and more cost-effectively. For example, CMS has an Innovation and Legal Operations team that uses data science and machine learning to provide clients with a more cost-effective service.

"Clients now routinely expect their law firms to bring solutions to the table that help improve efficiency and reduce costs," says Warne.

Greg Baker, global head of practice innovation at magic circle law firm, Linklaters, says the smart use of technology has been critical in supporting its client for some time.

"Our clients benefit directly from the technology we deploy. They can track progress of deliverables on an online workspace, negotiate documents themselves on our CreateiQ platform or ask us to interrogate our award-winning knowledge databases for negotiating positions and ‘what is market?’ information."

The firm's team of 2,500+ lawyers, spread across 30 offices and 20 countries, have access to document automation tools such as automated proofreading tools, AI-powered review tools to search across sets of documents, and project management tools to deliver a smooth service on time, says Baker.

"We provide our lawyers with a modern workbench of tools and services to enable them to draft a document, deliver some advice or negotiate with a counterparty, in an efficient way," he says, pointing out that the firm was one of the earliest users of document automation almost 20 years ago.

Find out about LexisNexis' legal drafting and productivity solutions

According to PwC's Annual Law Firm Survey 2022 of the top 100 law firms in the UK, the three biggest priority areas for legal
technology investment are ‘Document Management Systems’, ‘Matter Management’ and ‘Collaboration tools’. A report by LawtechUK found regulatory compliance and legal document management attracted the most cash, estimating overall productivity gains worth up to £1.7bn annually for legal service providers.

Find out how you can increase the productivity of your lawyers

The UK's increasing interest in legal technology is often attributed to the introduction of the Legal Services Act 2007, which enabled non-lawyers to own and operate legal services firms. Although the market penetration of alternative business structures (ABSs) is still relatively low, their introduction has undoubtedly stirred more traditional law firms to invest in technology and innovation.

"The Legal Services Act 2007 has had some impact on innovation, especially in the consumer-facing legal services sector, and in the corporate legal sector via the entry of the Big Four accountancy firms," says Mari Sako, Professor of Management Studies at University of Oxford's Saïd Business School.

Some argue that US law firms haven't followed the same trajectory, as ABS firms are banned in many states, which has stalled innovation amongst US firms.

"In the US, only certain states allow ABS firms to operate, most notably Utah and Arizona, and an ongoing regulatory sandbox in California."

However, Sako doesn't believe this has slowed innovation across US firms. "I don’t agree that the absence of ABS firms in the US has stifled tech innovation, as ALSPs and legal tech startups exist in the US as much as in the UK."

According to Murphy, Morgan Lewis was the first firm to launch an eData team and to start working with alternative fee arrangements, which it did more than 20 years ago.

"Our expansive technology portfolio and deep bench of technologists, engineers, data scientists, and process designers harness the power of data in service of our clients," she says.

"By automating and refining processes, we maximise internal efficiencies, reduce risk, and enhance the power and consistency of our services for clients."

Morgan Lewis is not alone in the US firms we spoke with – many echoed similar sentiments to their investment in legal technology.

An interesting example comes from Dechert, which launched its global Innovation Certification Programme in 2022. The programme, which most recently comprised of 80+ lawyers and other legal experts, drives innovation throughout the business for the benefit of Dechert's clients.

"We are already seeing the benefits of the programme with new ideas for client solutions, new technologies, talent reward and recognition, and more," says Levander.

While the vast majority of global firms have a strong tech offering, many smaller, more traditional law firms are lagging when it comes to technology investment, says Dana Denis-Smith, CEO of legal outsourcing provider, Obelisk Support.

“Many law firms are going around preaching digital transformation when they’re still on an outdated Microsoft package and everybody in the firm is struggling. It's a little bit funny that they don't see the irony of it,” she says.

In her view, the majority of alternative legal service providers (ALSPs) are better placed to enable in-house teams to get more work done and cut costs, says Denis-Smith.

“The volume of work that is floating around at the moment is huge. I think traditional law firms couldn't cope with it, especially with their structure and infrastructure.”

The starting salaries of newly qualified lawyers tend to dominate the news headlines – and for good reason. The figures many global firms are prepared to pay junior lawyers has a jaw-dropping effect on the wider population.

Clifford Chance recently hiked annual pay for junior lawyers in the UK to £125,000, matching magic circle peer Freshfields Bruckhaus Deringer, which bumped up newly-qualified pay to the same level. 

Yet US firms are known to pay junior lawyers in the UK even more. Davis Polk & Wardwell, for instance, now pays its new junior lawyers £160,000.

The experiences you can get at an international law firm can also be far broader than a local outfit, argues Francies from Weil.

"The clients and deals are much more international, in my experience. It is very rare to work on matters which are solely UK-based."

However, Francies also pointed out that lawyers working at US-based firms are exposed to greater responsibility at an earlier stage of their careers.

"In addition, because the teams tend to be smaller at US firms in London, there is much more opportunity to work on a greater variety of transactions, whereas in a big, UK-based firm you often don’t get the opportunity to do so."

All good firms, wherever they are head-quartered, can offer good quality work, access to technology, innovation and so on, says Shooter from Fieldfisher.

"The large US firms are very sophisticated outfits and offer rewarding careers for their people. However, US firms, in particular, largely run their offices from the US and have US-expectations of their people."

According to Shooter, as a generalisation this means that if you're working for a US law firm but work from the UK, the focus is likely to be almost entirely on your financial metrics (such as chargeable hours) than any wider contribution.

The billable hour expectations at US firms are typically higher than UK-headquartered outfits. The average at the top 10 UK firms sits at 1,373 per year, according to PwC's Annual Law Firms' Survey 2022. Yet at US firms, targets often sit between 1,700 and 2,300 hours per year.

This difference in expectations can be seen when looking at the average working day hours. Legal Cheek measured the average start and finish times for lawyers across a wide range of law firms, and found junior lawyers at UK firms is just over 10 hours a day. This jumps to around 14 hours per day for those working at US firms.

Download our report investigating the future of the billable hour

For firms with strict hourly targets in place, the pressure to meet those targets can be detrimental to mental health and well-being. More than two-thirds of lawyers in the UK and Ireland have recently suffered some form of mental ill health, with only 56% of those saying they had talked about it at work, according to Law Care’s Life in the Law report. 

“No matter how much amazing work you’re doing, if you’re not putting in those long hours, you’re not seen as being committed and you’re not going to progress in the law firm,” says a senior lawyer from a well-known firm.

However, some don't believe the billable hour is responsible for lawyer stress.

“While it’s certainly true that months and years on end billing tonnes and tonnes of hours is typically a recipe for burnout and other well-being challenges, it’s not accurate to put all of the blame on the billable hour,” says Krista Larson, director of well-being at US-based firm Stinson. “It’s often more of a quality than a quantity issue and not being able to have more autonomy and flexibility over one’s time.”

Larson’s role reflects a broader trend among law firms to hire wellness professionals who oversee well-being programmes and create an environment where people recognise the need to look after their mental health.

Read: The impact of pricing on profitability

A higher salary and a better work-life balance are among the top reasons why lawyers are leaving their jobs, yet many are conscious about joining a firm that aligns with their beliefs.

To attract and retain top legal talent, many international law firms are making moves to increase diversity among their legal talent, or introducing sustainability initiatives, or promoting more pro bono opportunities.

Morgan Lewis, for example, has its Mobilising for Equality (MFE) global task force, which is made up of hundreds of lawyers and non-lawyers who develop meaningful projects on racism, power, and privilege through a range of platforms such as discussions with clients and a robust internal training programme.

Clients are also making more complex reporting requests, especially in regards to diversity and inclusion, says Warne. CMS's Social Impact Programme aims to make a positive difference on local and global communities.

"We have seen a shift in clients wishing to ensure there is cultural alignment between them and their law firms," she says. "Many clients are deeply engaged in tackling the inequality of diversity and inclusion that might exist within their businesses."