Survey: companies wary of 'gimmicks' and look to relationships to choose advisers

More than a quarter of mid-sized European companies expect to increase their spend on external legal advice over the next 12 months, research has revealed.


The survey of 225 businesses with between 50 and 600 employees - conducted by LexisNexis Martindale-Hubbell - comes as City firms with significant European business interests report record fee income for the first six months of the financial year.


The research found that the respondents - who were located in France, Germany, Italy and the UK - based their selection of external legal adviser on relationships, with panels and lists of preferred advisers relatively unheard of. The companies were also wary of law firm 'gimmicks' and have a negative view of their marketing efforts.


The survey also discovered significant differences between countries in companies' reactions to billing practices, with the UK market the most resistant to traditional methods such as a percentage of the transaction or hourly rates. By contrast, these methods are a great deal more popular in France.


Businesses in France and the UK were also found to be much happier with the performance of their external legal advisers than their counterparts in Germany and Italy.


James Harley, international marketing director at LexisNexis, said: 'Confidence in the sector is high and cash flow is strong, allowing mid-sized companies to respond to competition by consolidating at national level. This provides a steady stream of mergers and acquisitions and broad commercial legal work for law firms.'


Meanwhile, SJ Berwin is leading the way as City practices report a bumper start to the 2006/07 financial year, with the firm posting turnover of £81 million for the first six months - up 35% on the same period last year.


Managing partner Ralph Cohen said that although the London market remained extremely strong, much of the firm's growth had been fuelled by activity in Europe. He said: 'Our Paris office has doubled its revenue in the past year and with only a few additional lawyers. The corporate management buyouts business has been particularly active there.'


Mr Cohen added that Germany was another source of growth, particularly in the mid-sized corporates sector - or Mittelstand - which is now emerging from a period of dormancy.


Ashurst is another City firm to have enjoyed a strong start to 2006/07, with turnover up by 28% to £117 million, compared to the first six months of 2005/06.


Managing partner Simon Bromwich said: 'We are extremely busy and growing across all practice areas and offices. In particular, our business in Germany has undergone a period of notable expansion and success.'