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|1||The legal market post-corona|
|2||The legal market post-corona|
|3||You cannot not communicate!|
Martina Müri: Prof. Mascello, we can now see the light at the end of the corona tunnel and are all looking forward to the coming easing of restrictions. What does this mean for the legal market? Will everything be like it was before corona?
Bruno Mascello: I don’t think so, for various reasons. So far, corona has been treated as a medical or health crisis, and any other interests have been subordinated to this objective. But for the legal market, it’s primarily the economic implications that are relevant.
MM: Can you explain this in more detail, please?
BM: Legal counselling, both in law firms and in legal departments, quite substantially depends on clients’ and companies’ economic state of health. If they’re in a bad way, the legal market will feel it as well. If turnover and profits practically disappear overnight in a crisis, a company will have to react immediately. It will have to safeguard liquidity and get expenditure under control.
MM: And what does this mean for legal advice?
BM: In the short term, companies will have to concentrate on costs, i.e. the so-called bottom line, because they’re only able to exert a direct and fast influence on this side. They’ll immediately prescribe cost-cutting measures, and these won’t spare legal departments, either. Legal departments will have to continue to do all their legal work, which might even increase in volume now. But they’ll now have to do so with reduced costs. I can see two options here: make personnel redundant or outsource less work to external law firms. It would be a bad signal if a general counsel fired the company’s own staff in order to supply more expensive external law firms with work.
MM: So legal departments will have to absorb a greater workload with a lower budget, and external law firms will have to expect a correspondingly reduced volume of work. Has this ever happened before?
BM: Yes, we noticed after the 2008 financial crisis that legal departments went in for so-called insourcing, that means to say that they did more work themselves and registered a certain growth. Also, the procurement departments became more important. I expect price negotiations with external consultants to increase as well.
MM: But in a few years, the pendulum will swing back to the starting position, won’t it?
BM: No, I don’t think so. A general counsel or the CFO will have noticed that the legal department has been capable of absorbing the incoming workload with the existing team, and has even been capable of doing so with a reduced budget for external law firms. So this requires genuine expectation management!
MM: And what will this crisis do to the relationship between lawyers and clients?
BM: In extraordinary times such as these, lawyers are having to prove themselves. Clients are now responding even more sensitively to good and bad behaviour or services because hardship is much closer and much more tangible. Accordingly, it is now that reputations and relationships of trust are being established. Legal consultants can now win over new clients or lose old ones, and both very quickly and forever. This is where the so-called customer experience (CX) pays off immediately. This also brings us to the requisite client orientation (cf. current issue of Anwaltsrevue 3/2020, p. 131-133) and the necessary soft skills for legal advisors (cf. interview in the current issue of Bilanz, May 2020, p. 118-120). The fact that legal advisors have the necessary legal knowledge is regarded as a matter of course by clients. In the market, this will not serve for purposes of differentiation; rather, other USPs are required.
MM: And what will this do to the structure of the legal market?
BM: There will be adjustments and structural change. Owing to their business models, not all law firms have amassed sufficient reserves; nor do they have a long pipeline full of mandates. In addition, we’re currently experiencing an incredible acceleration of digital transformation, whose results will be here to stay. This will primarily help new providers (such as legal tech) to grab a piece of the market. New forms of working (working from home) and New Work will not only be increasingly accepted but will be in demand, which will have an impact on the job and recruiting market. And then clients will announce new requirements. Finally, there will certainly also be more video conferences, i.e. conference calls with dozens of participants will be a thing of the past.
MM: To conclude, what would you like to say to legal advisors?
BM: In a crisis, selection takes place much faster and more rigorously than before. Naturally, crises are often apprehended as dangers reflexively because of the uncertainties that accompany them. I can see opportunities in crises! With the right attitude, changes can now be realised better or at last, and innovations can be ventured and implemented. So now is the perfect point in time to show the market that you’re better than your competitors. Seize the opportunity to leave a lasting – and hopefully positive – impression on your clients. And do some serious thinking about your own strategy and business model. I wish everybody the best of luck and a great deal of perseverance – it’ll be worth it!