Litigation: 78% of partners expect revenues to grow, but more work to be handled in-house

Partners at the UK's top-20 law firms are excessively optimistic about the number of cases they will handle over the next three years and could be forced to restructure their litigation departments as a result, it has been claimed.


A survey of 50 dispute resolution partners at the top-20 firms - conducted by accountancy firm Grant Thornton - found that only 4% thought their fees would drop over the next three years. Three-quarters (78%) expect revenues to grow, while 18% thought they would stay the same.


However, a poll of 50 in-house lawyers at major UK companies - mainly drawn from the FTSE-350 - found that two-thirds expect to spend less or no more on resolving commercial disputes than they do now.


Toni Pincott, a partner in Grant Thornton's forensic and investigation services practice, claimed the partners are likely to be mistaken about future earnings. She said there is a move to handling more work in-house, with a greater number of lawyers taking senior in-house roles. Companies are also increasing their use of mediation and arbitration, and taking legal advice earlier.


Ms Pincott predicted that law firms could become 'body shops' for large claims that cannot be handled in-house, forcing them to amend their staffing structures with greater numbers of junior staff and fewer partners. 'This will require law firms to reconsider their employment practices and consider how to retain talent,' she added.


Allan Connarty, director of operations at the Chartered Institute of Arbitrators, agreed that there is a shift to more in-house involvement at a senior level. 'It's intriguing - there are certainly more corporates including their senior counsel on their main board,' he said.


However, he suggested that the gap in expectations will be partly filled by rising international arbitration and mediation. Grant Thornton only surveyed UK-listed firms.


Sonya Leydecker, head of litigation and arbitration at City firm Herbert Smith, backed the idea that fee increases will come from abroad.


'We anticipate a higher volume of work over the next few years for the practice as a whole, particularly in the regulatory field and in international arbitration,' she said. 'Increasingly work, and therefore fees, will be concentrated on firms and individuals who are specialists. Anticipating this trend, we have been developing our specialisms in both of these areas.'


Graham Huntley, a partner at City firm Lovells and president of the London Solicitors Litigation Association, rejected Grant Thornton's claim that the surveys' findings meant dispute resolution partners could expect an overall drop in revenue over the next three years.


'Many of the major practices will see their fee income increase, because they have models that are in demand by clients and because there is still a lot of work out there,' he said. But the picture is not rose-tinted. 'I do agree that we're not in a market that is growing so much that everyone will grow,' he said.