Nevertheless, external lawyers should not be surprised if an invoice is returned to them marked with a ‘please explain’. “What irritates me the most is when I get an e-mail from a law firm and about 60 other lawyers at that firm are cc’d in. You can bet that the other 59 lawyers will charge for receiving, opening and reading the email. When I get a bill like this I send it back straight away. Firms that are not flexible here and more generally snotty about reducing fees wear my patience; we can take our work elsewhere,” says the regional general counsel of a US-based investment bank.
And the consensus is that despite the more flexible approach being adopted by firms, the charge-out rates at some international firms operating in the region remain too high, disproportionately so according to Flavell.
“The fees being charged in Hong Kong and China are still excessive. Just because a firm is a ‘Magic Circle/ Wall Street’ firm in the UK or US does not mean they justify the same fees in HK and China. Some firms and lawyers are excellent and may justify these fees, but many of these firms significant amounts of the time cannot,” he says.
Is this the window through which those firms outside the Magic Circle may attract more work from the region’s largest multi-nationals? The consensus is that this is a distinct possibility.
“There are various second-tier UK and US firms or first-tier Australian firms with offices of similar size to Magic Circle firms in the various parts of the region with experienced partners who have been working in the region for long periods and offer much cheaper rates. If I can obtain the services of a very good partner at the same rate as a mid-experienced associate from a Magic Circle firm, why use the more expensive firm?” Flavell asks.
His question is one currently being asked by in-house teams across the region. All of the lawyers ALB spoke to agreed that the answer isn’t likely to result in legal departments cutting the number of external firms they use or – as is the case in the US – see the end of the legal panel.
“The very point of the legal panel is that it offers companies who have operations in different locations around the globe access to knowledgeable local legal advice,” says Ingram, who uses one US-based international firm for most of his external legal counsel.
It seems that many companies are likely to retain their legal panels in the near future, if for no other reason than the size of the region means limiting external counsel to one or two firms is not practicable. Nevertheless, as the ALB In-house survey 2009 indicates, there is no guarantee that the size or composition of such panels will remain the same.
“I think it is fair to say that we are looking at the number of firms we use in the APAC region and looking to reduce the number and build stronger relationships with a smaller number of firms. Of course the size of the region means it is impossible to use the same one or two firms across the region,” Flavell says.