Biglaw, In-House Counsel

Are You There Biglaw? It's Me, The Client: Why GCs Are Pulling Even More Business From Firms

Survey shows 40 percent of GCs are looking to pull business from firms in the coming year.

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It’s not exactly news that general counsel are growing increasingly impatient with a law firm business model they see as inefficient and costly. Over the years, legal departments have been vocal about their plan to shift more work in-house or to smaller firms because they no longer see the value of paying for “brand name” firms when it comes to most legal problems. Yet the firms have lurched forward much as they have the preceding decades, offering lip service to changing their practices while secretly assured that clients will come running back to the comfort of an old (white) shoe, regardless of dimming demand and the explicit proclamation that Growth Is Dead (affiliate link).

It’s like Biglaw just can’t help but ignore the winds of a changing market where e-discovery firms have absconded with the document review fees and technology has flattened the resource advantages of a major player versus a small firm or in-house counsel.

What will it take to snap firms into the 21st century? Maybe a massive revenue hit:

Forty percent of law departments plan to cut outside counsel spending in the next year in the face of law firms that have failed to show commitment to changing the client service delivery model, according to a new survey of chief legal officers.

Don’t think this is a fair assessment, Biglaw? Well, your clients do. These numbers come from the Altman Weil Chief Legal Officer Survey, compiling the responses of 258 CLOs at organizations with average revenues of $11.5 billion, and they really don’t have a lot of faith in any promise that you’re going to change your ways. When asked “how serious legal department leaders believe that law firms are about changing their service delivery model and on a scale of zero to 10, the median response was a three.” Protest all you want, but perception trumps reality when it comes to keeping a client’s business.

Legal departments have figured out that legal tech may be a punchline to the Luddite Lawyer Brigade, but technology offers powerful advantages to the client, with nearly 60 percent of respondents citing new technology as a key element in building the internal efficiencies that have them telling their outside counsel to take a hike. Or, maybe more accurately, give us a better deal or take a hike:

More broadly, Altman Weil reported that CLOs want to work more collaboratively with law firms on pricing, matter management and staffing.

“They don’t want to be only buyers of legal services — they want to have a strategic voice in how that work is done,” the report noted.

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There you have it, firms: if you can’t get over yourselves and start bowing to what clients are willing to pay, the walls are going to keep closing in.

GCs To Shift More Work In-House As Firms Fail To Change [Law 360]

Earlier: General Counsel Increasingly Dumping The Top Biglaw Firms
Biglaw: Demand Is Slowing, Expenses Are Up
Is Patent Litigation Dead? What Gives?

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