Most law firms of any size devote considerable effort to attract and retain the largest national and international corporate and financial institution clients. The reason is very simple, these clients have a need for legal advice across their areas of activity involving multiple practice areas and geographies. They usually spend tens or even hundreds of millions of dollars a year on external legal services. As a result, such clients, if properly managed and developed, provide a relatively consistent and predictable flow of work to their law firms which in turn provides a degree of robustness and predictability to the revenue and profitability of the law firms.
The reality is that there are a limited number of organizations that consistently spend over $10 million per annum on external legal services. Many law firms want to act for them. Accordingly, the competition for roles with such clients is fierce and shows no signs of abating. General counsel in such companies have, at last, recognized that they have a high level of buying power and are increasingly exercising that either by establishing panels of preferred firms and/or demanding fixed prices or discounted hourly rates in return for representation. General counsel also have a far greater understanding of their own legal needs, of work that can be done in-house or needs external assistance and of the firms that are appropriate for certain types of work in relevant locations. With a greater parity of bargaining power between the consumers and suppliers of legal services it is inevitable that law firms have needed to be clear as to their expertise and value proposition in terms that are relevant to the client.
