Are the bells and whistles really worth it?

In recent months, several City law firms have announced eye-watering increases to the salaries of fresh-faced newly qualified solicitors.

The current high-water mark appears to be £180,000 reportedly paid by a US law firm.

Aside from the market driven justification for such salaries, are clients likely to be getting value from firms paying them? Julian Gray, an experienced international litigation and arbitration partner at Jurit LLP with 45 years PQE, reflects.

The accelerating hike in salaries for newly qualified (NQ) solicitors at the major law firms in London can be attributed, in part, to the impact of US law firms coming into the City. They have offered increasingly sizeable salaries to attract what they perceive as the brightest talent in the legal sector.

Of course, NQs are entitled to be paid a fair salary but the extent of the salary inflation that we are seeing today will not be without consequences – not just for the law firms and their clients, but for industry as a whole and perhaps even for the wider economy.

Indeed, despite the Bank of England’s nominal cut in interest rates last week, it has reportedly been reluctant to lower interest rates from its 16-year high because of the stubbornly high levels of inflation in the services sector.

And it is the end-user of legal services who will bear the brunt of the impact. Law firms who pay such salaries will charge ever higher rates to recoup these salaries, resulting in higher fees for clients. There will also be a knock-on effect throughout the legal sector with inflated salary and career expectations lower down the scale.

Some work may require, and justify, the most expensive firms and specialist lawyers, most of it will not.

Having worked at a large international law firm for the majority of my career, and managed overseas, I am well aware of the pressure that the well-known legal brands are under to be seen to compete. Not only this but their wish to foster the impression that, if they pay top dollar to their staff and their clients pay the same, they must be the best.

However, when it comes to legal capability, experience, and the ability to get things done for the clients’ benefit, there is much to be said for working with smaller, lesser-known brands. Very often, they can absolutely compete on quality and experience – and at a very competitive price too.

Big firms are frequently at pains to explain all the bells and whistles from which their clients benefit, but the truth of the matter is, that you don’t need to spend a fortune on City law firms to get the job done.

You need experience, relevant expertise, and focus.

That’s where smaller firms, which are made up of senior, experienced lawyers, can really compete and win – even against some of the self- proclaimed biggest and best firms in the world!

Experienced, senior lawyers who are confident in their own expertise can, and do, build bespoke teams for their cases which they personally run, rather than operating through an expensive pyramid structure which inevitably builds and exaggerates cost.

These bespoke teams may well include top independent experts and commercial silks, as well as highly qualified Counsel where necessary. Smaller firms have access to these people in exactly the same way as the bigger firms and tend not to be constrained by a requirement to use in-house counsel first.

My own experience would leave me needing to be persuaded that, however good they may be, the biggest law firms are better than a small firm with a well- qualified and experienced ‘manager’ using top people from the independent commercial bar, if and when their specialist advocacy skills are required.

That is how to add value, not with all the bells and whistles. For example, AI is increasingly being touted as the way forward, and it will have its place.  But AI and other technology is increasingly available and more affordably so. It is much more difficult to replicate the value and experience of senior lawyers who are working without a constant eye on the clock and the overheads!

NQs should be paid fairly and if the market dictates large salaries, so be it. But as a client, I’d be asking: “What is the impact on me and what will it cost me? Where is that money going and what value am I getting?”

How many hours are these NQs going to have to work to justify these salaries and what does that translate into in charge out rates for clients? And do I want my work done by people who may well feel ground down by long hours to justify such salaries? Can I get better value?

I would suggest, with respect, that just possibly you can!

Julian GrayJulian Gray is an experienced international litigation and arbitration partner at Jurit LLP.