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3 in 10 chief legal officers are shifting work to ‘lower priced firms’
Research shows that last year in-house team leaders are successfully using smaller law firms for the undertaking of legal work at a fraction of the cost.
Jerome Doraisamy
According to the 2018 Chief Legal Officer Survey, conducted by Altman Weil, 31 per cent of chief legal officers shifted law firm work to practices that offered lower prices.
“However, law firms are subject to ever-greater scrutiny as CLOs refine their strategy for law firm selection and cost control.”
This perhaps explains why, last year, three in 10 CLOs shifted law firm work to lower priced firms.
“In additional survey commentary, department leaders noted that they are successfully using smaller law firms that offer quality work and service at considerable reductions in cost,” the report read.
“According to the survey, shifting law firm work to lower priced firms is the most effective cost control effort that law departments have undertaken this year. It is surprising that more departments are not making use of this tactic.”
Further, 62 percent of law departments received price reductions from outside counsel this year, with a median discount of 10 per cent off standard hourly rates, Altman Weil noted.
“Overall, law departments estimate that they have negotiating power over three-quarters of fees on matters outsourced to law firms, including significant influence over 47 per cent of fees,” it said.
“However, 55 per cent report that law firms resist greater discounting. Larger law departments are most likely to receive discounts – but they are also most likely to face resistance from outside counsel. This may be because large departments are often working with largest and most sophisticated law firms, the segment of the market where demand is most likely to outstrip supply.”
The Chief Legal Officer Survey aims to provide insights into the state of in-house legal departments from the perspective of their top lawyers, according to Altman Weil.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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