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Mid-tier confidence a strategic dead end

Mid-tier confidence a strategic dead end

The perception that mega law firms are under threat from their mid-tier counterparts may prove to be wrong. Ted Dwyer, from law firm consultancy Dwyer Heath, writes.

The perception that mega law firms are under threat from their mid-tier counterparts provides a dangerous confidence that could see mid tiers missing out on some major opportunities. Ted Dwyer, from law firm consultancy Dwyer Heath, writes.

SPEAK to the managing partner of a mid-tier law firm and you’ll be struck by their confidence at the moment. There is a growing perception that the major law firms are under threat, with clients demanding the same quality of work for reduced prices. 

There is an assumption that legal work will therefore migrate from the major firms to mid-tiers, which can offer the same levels of service and expertise. By offering the same level of service at a reduced price, a mid tier can compete with a top-tier firm on the basis that it is better value. The future appears rosy. As I write, mid-tier firms are basing their business development strategy on these assumptions.

The logic is right but unfortunately, both assumptions may well prove to be wrong. This way of thinking is a strategic dead end and should be re-visited in detail.

Let’s look at pricing first. While it is true that in-house clients are fed up with the rates of the large law firms, they will still pay a premium for legal work where the stakes are high enough. Large law firms provide security that senior managers, as well as boards, will pay for. As yet, mid tiers do not. Conclusion? Major deals and high risk work will continue to go to the majors. Evidence points to this trend continuing.

Then there’s trying to compete with major firms on expertise and service levels. A number of powerful mid tiers have adopted the ‘dump and jump’ method to leverage themselves as genuine corporate powerhouses. The idea is simple – dump non-corporate work, especially litigation teams – and ‘jump’ into the corporate sector, usually by expensive lateral hires. 

While this might look feasible on a powerpoint slide, it doesn’t work. A litigation firm can’t suddenly become a corporate firm in a way that is meaningful to clients. It’s just not possible to create a genuinely strong corporate offering overnight, and expect clients to re-direct high risk work your way. 

The major law firms have powerful, strong cultures. They have built up expertise and know-how in managing high risk legal work, often over decades. It is very risky indeed to assume that a mid tier can easily compete with that strength. 

So all gloom and doom for the mid-tiers? Not at all. For those firms, the key is to target the major law firms where they are vulnerable, rather than to compete against their strengths. And they are certainly vulnerable, but perhaps not where it is assumed. 

Here’s a hint – over 80 per cent of in-house teams are small, with only 2 to 3 lawyers. Mid tiers should target the soft underbelly of high volume, repeat work – such as regular litigation or contracts – which many in-house counsel struggle to manage. This must be done carefully, however. By doing this correctly, a mid-tier firm can begin to build a platform relationship with a client. These relationships, if managed well, can over time lead to the premium work being re-directed to a mid-tier firm. This approach requires patience and a carefully planned approach, but it is worth it. 

Ted Dwyer works with law firms, as well as in-house counsel on pricing, profitability and strategy. He can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it.

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Mid-tier confidence a strategic dead end
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