A strategic change for law firms?

Iberian Lawyer research has seen some law firm leaders suggest that their firms will
have to move away from a reliance on transactional-led practices towards more
advisory-led work, as clients regulatory and compliance needs increase. Is this
correct – how might such a change impact on law firms’ structures or profitability?

'Most firms will see their transactional work
decreasing and this will affect their profitability. It
means adapting teams, fee structures, client
relationships, approaches and skills. Eventually
prime work will be regarded more as the
possibility of engaging a long term relationship
with a solid client rather than waiting for the
opportunity of a one-shot transaction.'
Frederico Pereira Countinho, Cuatrecasas,
Gonçalves Pereira

'If by 'advisory-led' work we
mean that firms must be trusted
advisors to their clients, then yes
firms have to concentrate on this. If
what is meant is that firms must do
more routine, less value-added,
commoditised work, then
I strongly disagree.
Charles Coward, Urí­a Menéndez

'While this crisis lasts, clients will need
reassurance from their lawyers – and not the
hit and run approach typical of transactional
lawyers and transaction-led law firms – that
the choices they make, whether in
restructuring, in refinancing or in M&A, are
the best options available to them. This of
course impacts on the immediate return of
law firms but it should pay dividends in the
long term as clients will recognise the role of
their legal counsel in overcoming this phase.'
Joao de Macedo Vitorino,
Macedo Vitorino

Luis Riesgo, Jones Day

'I believe the change is more profound
than merely passing from transactionalled
practices towards more advisory-led
work. Many firms previously considered
their client to be the operation rather than
the client itself. The law firms that chose
to maintain their commitment to the
clients, respecting the tradition of the
legal profession, are better placed in this
new world than those that decided to
transform into, solely and exclusively, a
legal business.
Luis Riesgo, Jones Day

Iñigo Igartua, Gómez-Acebo & Pombo

'There is now
more advisory
work than
transactions but
this does not
mean that we are
moving away
from one model
to another, we
can adapt to
market needs as I
believe other
well-established firms do. For a law firm
that bases its profitability on transactions
certainly times are tougher, but these
firms are few.'

Iñigo Igartua, Gómez-Acebo & Pombo

'Some departments, like labour and litigation, have experienced
an increase in activity and others have had to be creative and seize
the M&A and business restructuring opportunities that are still
around. Some firms, like ours, have taken this opportunity also to
execute their international expansion plans and to increase their offer
and market presence. Like in all other aspects the current market
situation affects law firms in different ways, meaning that it is
difficult to foresee a pattern.'

Nelson Raposo Bernardo, Raposo Bernardo

'Firms need to provide their clients with tailor-made solutions to
help them to overcome the financial problems they are facing. They
need to come up with innovative solutions to reorganise and adjust
their clients´ businesses. The change from transactional to advisory
work has led to pressure on firm´s fees which force them to have a
more effective contribution to their client´s profit and loss balance.'

Rafael Alonso, Hammonds

Bernardo Cremades, Cremades & Asociados

'In my opinion, this is an over-simplification of the work of law firms.
The transactional-led practices will continue, although with a different nature such as
restructuring. The strategy depends on the structure and work of each law firm. The
current work does not necessarily imply a difference in profitability. With regard to the
impact on law firms structures, this depends on how the firms are organised in
relation to the volume of work required by the clients. Disproportional growth which
does not meet clients demands is always a result of questionable management.'
Bernardo Cremades, Cremades & Asociados