The time has come for mid-tier firms to separate themselves from others like them, commentators argue, and find either niche specialities or superior marketing strategies. In a marketplace where a growing number of top practitioners depart the top tier in favour of the “best of the mid tier”, in an effort to access a less constrained and large partnership, the mid tier is being given an excellent opportunity to be entrepreneurial, Advanced Human Technology CEO Ross Dawson told Lawyers Weekly.

“If you are an individual lawyer who is great at your work, you can encounter greater constraints working for a top-tier firm than a mid-tier firm, which has less of these constraints around conflict.”

A flow of senior lawyers moving around top-tier firms and the best of the mid tier is “driven partly by the constraints of working in large partnerships”, said Dawson. He argued that for some lawyers, a move to the mid tier would be an attractive option because they “can be more entrepreneurial if they move to an organisation that has less of those constraints”.

Deborah Zurnamer, senior consultant at legal recruiter BSI People, argued there is a “shake-up” in the market at the moment. A shortage of good quality talent and the movement of senior practitioners within both the top and mid tier means firms are having to stand out from their competitors.

Some firms in recent years have achieved this, said Dawson. “What we’ve seen is a whole new rise in the past few years of the whole top of the mid tier. Look at firms like Sparke Helmore and Piper Alderman, and some of the other firms, which are perceived by top practitioners to be equivalent of the top-tier firms in the quality of the work that they do. They are seen to be equally competent in their key areas to the top-tier firms,” Dawson said.

But mid-tier firms have an advantage in being more flexible than the top tier, he said. “This is an opportunity for them to take market opportunities, be more entrepreneurial and to build real niches in focused areas. So you start to see it makes sense for key practitioners to group together and build a real profile for a particular firm. For example, Gilbert+Tobin with their telecommunications, or other firms with their IP practices,” he said.

Zurnamer said that in this competitive marketplace, in which every firm is looking for the top quality candidates, “mid-tier firms need to establish a real point of difference”.

“I think that it’s crucial in terms of a marketing edge for them. I think [mid-tier firms] must be clear about what they are trying to achieve — what differentiates them from other firms. There has to be an energy force around the firm that is being driven by management. This really affects market perception in regards to specialty candidates who will then be drawn to a firm that has that edge about it, or the buzz about it,” she said.

While some firms successfully market themselves, and find niche specialties where they are considered to be top tier, “there is a [group] beyond that in the mid tier that is struggling”, said Dawson. He argued that some firms that try and present themselves as full service firms face a very difficult challenge in the current market.

“There are some other firms that are not really recognised around one or two practice areas. Firms that try and be all things to all people are facing “a really challenging ambition”. Such an aim “is more likely to make these firms struggle than succeed”, he said.

“I think we are starting to see there is a segment of mid-tier firms who are standing out in that they have attracted some of the key practitioners in a few practice areas. And other mid-tier firms have higher ambitions, but because they are positioning themselves more broadly, they are finding it harder to distinguish themselves.”

Consultant Sue-Ella Prodonovich told Lawyers Weekly that some mid-tier firms have achieved this. “Certain firms, including Gilbert+Tobin and Henry Davis York, Arnold Bloch Leibler, are top tier in the areas in which they choose to practise. As well, Sparke Helmore has moved into this market, and Gadens has gone in with a high volume of mortgage work — that is a very profitable firm,” she said.

This raises the debate about the benefits of the one-stop shop versus the best of breed, said Dawson. “The one-stop shop clients say ‘we go to one firm and we want them do everything — they understand us well, they can cover all our requirements, we can have a strong relationship’.”

The other preference is best of breed clients. These clients want “the best single person out there”, said Dawson. He argued that the best person is unlikely to come from one firm. These clients see that for some matters it is not necessary to have the best person, “when they can use a run of the mill firm, as it were”.

“I tend to believe that most clients are happy to deal with more than one law firm, and in fact [they] actively do. Any significant client will want to have more than one string to their bow, more than one firm doing [their work],” he said.

There has been an evolution in professional services, said Dawson, and while different clients have different philosophies on what is better, Dawson argued that the “trend of the moment” is that clients are looking for best of breed.

“Clients tend to say we will segment our work, we will try to consolidate as much as we can but we will go to the best person as required. It is nice as a mid-tier firm to be able to say ‘we are able to do everything’, but I think it is a big mistake to try to do that. For the positioning of these mid-tier firms they do need to recognise the reality of these specialist [competing firms],” he said.

Firms should learn from the experience of investment banks over the past decade, Dawson said. “The investment banks were all saying ‘we do everything’. They were acquiring other companies, they were building new operations and saying ‘we can cover the whole spectrum of institutional financial services’.

“Almost all of them gave the conclusion that this was a bad idea. And they now say, even though they are very large institutions, ‘we don’t do everything — we do some things extremely well, but there are some things we don’t do’.

For top-tier firms, being generalist is more appropriate, said Dawson. “That makes sense. This a viable strategy for these firms,” he said. But for the mid tier, “I think it’s a very, very difficult positioning for them to take and it makes more sense for them to focus their energies on having a few areas where they do stand out. I think it is unrealistic to get all work from their clients. In this environment it is very easy to find good suppliers — it’s not a big job to find who the best people are. For some law firms, it doesn’t make sense to be all things to their clients.”