find the latest legal job
Corporate and Commercial Partner
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Adelaide CBD · Join a leading Adelaide commercial law firm
View details
Freelance Project Finance Lawyers
Category: Other | Location: All Australia
· Vario are looking for freelance lawyers with experience in project finance ideally within the renewable energy sector
View details
Vario Freelance Lawyers
Category: Construction Law | Location: All Australia
· We are looking for lawyers who appreciate the endless possibilities that a freelance career can offer.
View details
Freelance Construction Lawyers
Category: Construction Law | Location: All Melbourne VIC
· We are looking for construction lawyers who appreciate the endless possibilities that a freelance career can offer.
View details
Banking Associate - 1-6PQE - Allen & Overy
Category: Banking and Finance Law | Location: United Kingdom
· Banking Associate - 1-6 PQE - Allen & Overy
View details
Size of legal fee does matter: Clients

Size of legal fee does matter: Clients

Costs are still the main deterrent when clients are scouting for new law firms, a new report has found. And not enough firms are doing anything about it.

Costs are still the main deterrent when clients are scouting for new law firms, a new report has found.

An extensive new report finds that the best way for law firms to improve working relationships with their top organisational clients is to be more concerned with costs.

A study by the Corporate Lawyers Association of New Zealand (CLANZ) and the Australian Corporate Lawyers Association (ACLA), the ACLA/ CLANZ Legal Department Benchmarking Report 2010, delivered results to the newly released report.

The studyinvolved research with more than 150 companies and government agencies thattogether spend more than $2 billion on legal costs annually.

“It’s hardly surprising that costs are amongst clients’ top concerns”, says former CLANZ president Ron Pol, whose professional services consultancy Team Factors conducted the research.

“But it’s not just the size of legal fees; the way that lawyers communicate costs – and the timely reporting of unexpected overruns – seems to be a big part of the issue.”

The general counsel of some of Australasia’s biggest organisations - with some of the largest teams of in-house lawyers and most sophisticated legal procurement systems - reported that when they asked law firms for fee estimates, the final cost was consistently on or below budget just 4 per cent of the time.

Only about a third (32 per cent) reported that law firms met budget more than half the time.

Despite many of these organisations spending tens of millions of dollars on legal fees each year, the report also points to the importance for law firms to better understand evolving client needs.

“The message is clear,” said Helen Mackay, CLANZ chief executive. “Optimal outcomes and value for money are more important than hourly rates; but overall a better understanding of the needs of clients is critical."

Financial data also highlights the gap between the hourly cost of in-house lawyers and law firm hourly rates. The median fully-loaded in-house counsel hourly cost based on total hours worked is $123 in New Zealand. Even on a ‘chargeable hours’ basis similar to law firm measures, the median hourly cost of in-house counsel is $183; considerably lower than the top rates paid to law firms, which can be as much as $600 per hour, or more.

“Little wonder that 43 per cent of New Zealand respondents, and even more in Australia, reported that they expect to increase the size of their legal department over the next two years,” said Mackay.

“This correlates closely with the top issue facing legal department leaders,” adds Pol.

“Workload/time pressure remains the number one issue, with the need to reduce outside law firms’ costs another. Although many issues need to be considered in decisions about the optimal legal department size, sometimes the quickest way to relieve both issues at once is to increase the size of the legal department.”

The findings support this. Most legal departments predict growth, albeit at a moderate pace over the next two years.

“This presumably reflects that workload and cost pressures are tempered by the need to make carefully considered decisions," Pol said.

"Just like their law firm colleagues, resource and budget limitations also feature as key issues facing legal department leaders.”

At a broader level across the legal services market, the impact of legal departments more actively reducing the cost base of their companies and government agencies would have a direct impact on the revenue base of many law firms.

Like this story? Read more:

Book commemorates diamond milestone for WA law society

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

Size of legal fee does matter: Clients
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Debate rises over Victorian judiciary attack
Debate rises over Victorian judiciary attack
The Victorian Bar has become the latest to go on record condemning recent political attacks on the V...
Michelle Quigley QC
Vic Barrister who helped stop major heritage redevelopment joins Supreme Court
Michelle Quigley QC, who assisted a coalition to oppose the redevelopment of St Heliers villa estate...
Building, construction
Building for NSW coroner’s complex slated for early 2019
Efforts to relocate the state coroner’s facilities from Glebe to Lidcombe are on track, according ...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...