Survey: law departments push new models to cut fees

Corporate law departments are reducing legal costs by negotiating with outside counsel and, in some cases, shifting work to lower-priced firms or increasing their own in-house team, a survey has shown.

According to the Altman Weil 2012 Chief Legal Officer Survey – in which over 200 General Counsel participated - Chief Legal Officers (CLOs) were asked what they have done in the last 12 months to control costs.

Price reductions

The highest percentage by some distance (71 per cent) reported that they have negotiated price reductions with law firms, while 47 per cent said they handed work over to in-house teams and 41 per cent shifted the work to lower-priced firms.
‘Chief Legal Officers are not waiting for law firms to change their business models,’ commented Altman Weil principal Daniel DiLucchio. ‘They are taking change into their own hands in 2012 to create a new internal value proposition.’
The survey also found that 36 per cent of responders reduced the total amount of work sent to outside counsel, while ten percent of CLOs reported instituting a law firm convergence program.

Understanding

CLOs also revealed clear preferences for how they choose law firms. On a scale of 1 to 10, ‘demonstrated understanding of your business/industry’ was the top factor at 9.6, while referrals from colleagues (8.6), personal contacts (6.7) and written material demonstrating a lawyer’s expertise (6.1) also figured highly.