Law: Being special has effects: Sharon Wallach finds out how firms are chosen

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The Independent Online
THE RANGE of specialist expertise is the most important factor when companies choose a legal adviser, according to a survey by the City firm Taylor Joynson Garrett. Views were sought from legal decision-makers in 130 companies from the Times list of the top 1,000 companies, divided between small, medium-sized and large businesses.

Costs ranked only fifth in importance and the size of the firm was a long way down the list. 'What appears to really matter is the degree of specialisation the law firm can offer,' says Gordon Jackson, managing partner of Taylor Joynson Garrett.

About 71 per cent of companies surveyed use more than one specialist adviser. 'The larger companies, which are sophisticated buyers of legal services, are happy to shop around, and many use nine or ten different firms for legal advice,' Mr Jackson says.

'Smaller companies tend to rely on a single firm for all legal advice, although many also shop around.' ('Smaller' is misleading: in the Times list, the category includes companies such as Pioneer and Sanyo.)

Understanding a company's business, speed of response and personality were the next most important factors. 'We were surprised that those four came above costs,' Mr Jackson says. 'However, costs excited the most comment. Some said you get what you pay for, others that London firms are the most expensive in Europe. Generally, there was agreement that the way of getting good value for money was to look for specialisation, speed of response and so on, and then negotiate fees to a sensible level.'

The survey also revealed a divergence between smaller and larger companies on the subject of intellectual property (IP) advice. Only just over a quarter of smaller companies take any legal advice on protecting patents, copyrights, trademarks or design and only 53 per cent of all companies on the list are prepared to take any intellectual property advice.

'It demonstrates something we experience in practice,' Mr Jackson says. 'Even large companies don't have systems to protect their intellectual property rights, and we often find we have to explain what IP is.'

One in five companies required corporate recovery advice over the past year. 'This could have been related to people the companies deal with, but we asked in what area the advice was sought. What was notable was that one in 10 had taken advice on debt restructuring or directors' liability. We would expect therefore that the advice was taken on the companies' own account.

'It's a clear indication of what has been going on in the recession,' Mr Jackson says. 'It is interesting that directors of what could be regarded as Britain's most secure businesses were concerned in this area.'

Half the companies surveyed had taken advice on employment issues during the past year. In 40 per cent of these cases, the advice was in the area of termination. 'It suggests that companies are still facing cuts, probably at executive level, which is when we have found that firms ask for advice, or when the cuts concern large numbers of people,' he says.

'And the level of advice on incentives and share schemes is low, which indicates that in the current employment market, it is not necessary to offer those sorts of incentives.'

There is comparatively little demand for advice on environmental issues, he says, either on the corporate or the commercial property sides. This is surprising, Mr Jackson says, considering the '27,000 processes' demanded by legislation, and the requirement by the Institute of Chartered Accountants for companies to note on their balance sheets the degree to which environmental laws affect them and the degree to which they are complying. 'We wonder how far environmental regulations have begun to be recognised as an issue.'

Other findings included a high level of activity in property development and bad news for in-house lawyers with no sign of an increase in the number of jobs. Almost 70 per cent of the companies surveyed were still using outside legal advice.

On a brighter note, companies are expecting to take more legal advice in the corporate finance sector during the coming year. Mr Jackson says this may mean that 'things are turning around'. Lawyers are in a good position to see the beginnings of an upturn because, he says, they are involved in deals at early stages. 'In fact, since November, we have seen a notable upturn in new instructions right across our firm.'