New balance of power

City law firms are under acute pressure from clients over pricing and terms of engagement, new research has shown.

The balance of power between client and lawyer has shifted, according to an independent study commissioned by the Solicitors Regulation Authority (SRA), Independence, risk and representation: An Empirical Exploration of the Management of Client Relationships by Large Law Firms. However, firms that resist terms of engagement that they find unacceptable will still find work.

During interviews with senior corporate lawyers from 20 of the largest firms, undertaken by the University of Birmingham and Claire Legal Ltd, about three-quarters of interviewees outlined scenarios where they were forced to accept onerous terms of engagement with little room for discussion on fees, conflict of interest requirements and IT security.

Clients are restricting via contract who a firm can or cannot work for, raising access to representation issues.

The report states: “Of most concern are claims from some lawyers that these contractual provisions might be used strategically by some clients to deny claimants representation from a tier of firms. It was suggested to us by a minority of our interviewees that law firms may be appointed to those panels, and made to sign ‘no sue’ clauses, where the client has little or no intention of giving that firm work.” While the report’s authors suggest that further research is needed to substantiate these claims, they describe them as “alarming”.

Crispin Passmore, SRA executive director for policy, says the increased pressure makes it “all the more important that the professional principles of independence and ethical practices remain at the heart of solicitors’ decision-making”.