Heidi Gardner, a law lecturer at Harvard, has studied six global firms (including three law firms) and the way that their partners and others collaborate. She concluded that 'the more disciplines that are involved in a client engagement, the greater the annual average revenue the client generates'.
The attitude of the client to pricing on complex matters helps explain this. Ms Gardner says: 'That’s in part because cross-specialty work is likely to be less subject to price-based competition. Whereas clients view an engagement involving single-specialty expertise (about a basic tax issue, for instance) as a commodity that can be awarded to the lowest bidder, they know that cross-specialty work is complex and harder.' She adds: 'My research at one global law firm showed rising revenue per client even as five, six, and seven disciplines became involved.'
Complexity increases as more jurisdictions are involved. Ms Gardner adds: 'Client projects involving offices in several countries are significantly more lucrative than single-office engagements. That’s because cross-border work is often especially complex and demanding.' This phenomenon may help explain why firms such as Allen & Overy, Dentons Dacheng and Herbert Smith Freehills are expanding their networks so fast and why they are delibrately focusing on more complex work. It might also raise a question over the strategy of Slaughter and May which limits itself to its London HQ and just three other offices. Source: Harvard Business Review