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Law firms ‘least likely’ to lead change in legal market, say corporate counsel

Most chief legal officers dissatisfied with traditional legal service model, survey finds 

17 November 2014

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By Manju Manglani, Editor (@ManjuManglani)

Only four per cent of corporate clients are satisfied with law firms' traditional service delivery model.

That's according to an annual chief legal officer (CLO) survey, which found that innovations in cost and project management are key differentiators when selecting outside counsel.

"Chief legal officers may have mixed opinions about the best model for the inside-outside relationship, but the fact that only four per cent are content with the status quo is an unambiguous indicator that the old model is not sustainable," commented Daniel J. DiLucchio, principal at Altman Weil and author of the survey report.

Forty-three per cent of CLOs say they don't care about a law firm's delivery model as long as they get the results they want at a competitive price.

A further forty-two per cent say they like to work with firms that offer innovative service delivery, although other selection factors may take precedence.

Less than a tenth (nine per cent) of respondents said they actively seek out law firms that offer innovative approaches to service delivery.

The top service improvement which law firms could provide, according to 58 per cent of respondents, is greater cost reduction.

Also at the top of the list are more efficient project management (57 per cent) and improved budget forecasting (56 per cent).

However, when seeking outside counsel for 'bet the company' matters, only a tenth of respondents said they want the lowest price available.

More than a third (37 per cent) said they prefer transparent pricing in which they understand how and why the price is set and have the opportunity to discuss changes.

A further 27 per cent said guaranteed pricing is a key factor, while 26 per cent opted for value-based pricing.

"Initially it may seem that law departments just want to pay less for outside counsel. But these results show it's more complicated," said DiLucchio.

"Some CLOs really want law firms to be more efficient and to align with their department's internal efforts to innovate legal service delivery. Others may have a more transactional relationship with outside counsel that is primarily driven by price considerations."

When asked who is the most likely change agent in the legal profession over the next ten years, only six per cent of CLOs said they envision law firms as the most likely to lead change.

Two fifths (43 per cent) said corporate law departments will lead change; a quarter (23 per cent) think technology innovation will be the prime mover and a fifth (18 per cent) see non-law firm providers of legal services as being at the forefront of change. A further nine per cent think Gen-X lawyers will take the lead.

When asked to rank on a scale of one to ten law firms' seriousness about changing their service delivery model to provide greater value to clients (as opposed to simply cutting costs), the median response was three, unchanged since 2009.

The 15th annual Altman Weil chief legal officer survey received 186 responses, of which 93 per cent are from organisations with annual revenues of more than US$1 billion and three quarters are from public organisations.



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