Legal Cost Specialists

The future for legal costs firms?

The mantra currently running through the legal profession is:

Get big, get niche or get out.

This is a big issue in the field of personal injury with the advent of ABSs. This view is not universally held, there are those such as Kerry Underwood who passionately believe in the traditional law firm model.

Nevertheless, the “get big” approach is currently gaining much traction with the legal press regularly reporting some of the big players busily gobbling up other law firms.

This trend is also beginning to be seen amongst costs firms. In part, this is of little surprise with the combination of the Jackson reforms and major legal aid changes. When the Jackson Report was first published I predicted: “Firms will be looking for mergers and management buy-outs for what remains of these businesses, if anything”. The volume work will start to dry up over the next six months and we will then start to see a flurry of such activity.

The shake up to defendant costs firms will be rather less than for claimant firms. Insurer panel firms have already seen significant consolidation over recent years. Although there will no doubt be further consolation as volume work starts to decline for defendant solicitors, the pace will be much less than for claimant firms.

Whether acquisitions of competitors is a good thing is a questionable point. Mark Feeney, writing in the Solicitors Journal, highlighted some interesting statistics from:

“a KMPG study which looked at a series of major PLC acquisitions between 1990 and 2000. Only 17 per cent successfully created value, a third appeared to ‘break even’ and a half were unsuccessful and caused losses. This study mirrors many in that acquisition appears a quick and easy way of developing a business but all too often it seems the opposite occurs.”

How many looking for aggressive takeovers will discover they have been sold a pup?

3 thoughts on “The future for legal costs firms?”

  1. Large firms are trying to get bigger, true. Its not about survival, but cashing while they can. One firm I know has recently taken on so many “trainees” fully 1/4 of their Northern office has 3 months experience or less – a fact I know their clients know nothing of.

    I also know many Defendant firms are diversifying, and whilst anticipating the inevitable fall off in Portal/Matrix work (oh the arguments over disbursements continues to grow apace however), many are anticipating the new areas of litigation – anyone for CPR 45.13 or the ways around QOCS??

    There is too much fat in the profession. Too many “draftsmen” who can only count letters, without understand a file composition; too many “negotiators” who work off % reductions or tired incorrect arguments without realising the value of what they COULD be saying. The ACL has focussed its assault, on trying to protect its elitism by getting bill drafting a protected activity – good luck to the bean counters they represent, it will not avail them at all.

    There will always be value, and need, for costs professionals, but only the innovative, those whom understand that costs is at the heart of the entire legal structure, and that the greed of the majority who were willing to sell their souls to “maximising profit costs” (you trawl the internet and look at all the Claimant drafting firms, they all profess this specialism, and we all know what it means), or to “achieving maximum reductions” and playing puppets to the Insurers, has killed their very existence.

    I for one look forward to a continuing long and very profitable career as a costs professional in this legal profession, and it wont be by changing a damn thing about what I do now.

  2. We will achieve maximum profit costs

    Rather than attending countless conferences like “how to survive post Jackson”, why not come up with your own ideas, work hard and provide a great service.

    If you are attending conferences and looking for inspiration then it its actually time you got out.

    Listening to ‘key note speakers’ or Kerry Underwood and hanging off every word will not make you a success.

    Industrial disease, clinical negligence, commercial work, high value RTA, EL, PL, cost budgets, pre Jackson run off and portal cost disputes will keep a lot of people busy.

    The future is all about great service and results…

    I note Kain and Knight have recently purchased Quantum Legal Costs, anyone know the figures involved?

    I am not sure about the comments above, if you are a Claimant firm why would not seek to recover maximum profit costs? Why should they advertise differently?

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