Landscape Appears Promising for Outside Counsel
The global financial crisis of 2008 drove many businesses to spend less on outside legal assistance and more on bulking up in-house support in order to decrease overall legal costs. For more information on this trend, please review “Are In-House Departments Contemporary Law Firms?” by Mark A. Cohen of Forbes.com (click here for the article).
Technology advances have also given in-house legal teams more leverage in delivering legal services by increasing collaboration and automating systems that were previously labor intensive. Where outside counsel once provided end-to-end services on all legal matters they are now, at times, being replaced by in-house legal teams and/or vendors that are deemed more cost-effective.
While legal work seems to be increasingly moving in-house, the data shows a direct positive correlation to increased spending on outside counsel. In Altman Weil’s most recent Chief Legal Officer Survey, from 2017 to 2018, 42% of in-house legal departments increased their spending on outside counsel with 41% of the Chief Legal Officers planning to increase their spending into 2019 (download the report here). Bussinesswire.com reports that the 2018 HBR Consulting Law Department Survey which shows 81% of the participating law departments expect their legal needs will continue to rise into 2019 (click here for the article). While in-house law departments are beefing up technology and full-time talent, 61% of the HBR Survey respondents cite an increase in hourly outside counsel rates, which pushes them in the direction of finding legal providers outside of traditional law firms.
Is your practice poised to take advantage of this trend? Robin Hensley, former president of Raising the Bar, offers suggestions to law firms working with in-house counsel (her article here). She suggests reviewing rates to remain competitive. Other best practices include ensuring the legal team you’re proposing reflects the diverse nature of their company and to take the time to get to know the company’s full scope of business, not solely focusing on the one specific matter you were brought in to handle. She believes all of the above play a large role in which firm ultimately gets the work.
If you or your firm is looking for guidance on how to stay in front of trends like this, D. French Advisors is available to help.
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