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In-house must step up or lose out

In-house must step up or lose out

In-house lawyers must keep better track of their external legal spend or risk being slammed with rising hourly fees and ultimately losing their upper hand in the client/law firm relationship.…

In-house lawyers must keep better track of their external legal spend or risk being slammed with rising hourly fees and ultimately losing their upper hand in the client/law firm relationship.

That's the opinion of visiting Canadian law firm management consultant Richard Stock who, after presenting to and speaking with hundreds of in-house lawyers in May, concluded that Australian in-house lawyers believe law firms are on the cusp of significantly raising their hourly fees.

"The price and cost of legal services is going to go up more quickly than the cost of living in Australia," Stock told Lawyers Weekly.

But, added Stock, in-house lawyers are not under as much pressure as their external advisors might think - despite not being able to source the time to adequately manage their legal spend.

"We would always ask at the beginning of our seminars, 'are you under significant pressure?' And the answer was usually no," said Stock.

He said in-house lawyers need to factor time into their roles to do proper due diligence regarding law firms.

"They have to do their preparation and their homework. They have to get better data from their firms," he said. "To the extent that there is a good strong trusted relationship, it's the data that will give them the power."

Stock added that corporate legal departments must also consider the number of law firms they are working with in order to get the most out of their relationships.

"There is no correct number, but the point is that some careful thought has to be given to what is the right number of firms for the type and the amount of work you need to get done," he said. "My answer is always that the smallest number possible is best."

After limiting the number of law firms they work with, Stock said in-house lawyers should then aim to move beyond discounted hourly rates to a more stable and predictable means of charging.

"We are encouraging companies that are still buying [legal services] on an hourly basis to at least do so on a blended basis," he said.

Stock believes in-house lawyers have the tools and knowledge at their disposal to more effectively manage their legal spend, and that it's now up to them to commit the time to do it.

"The point is that people have to invest a bit of time, not a lot, but a few dozen hours to ask the right questions, use the right techniques, and come up with the right solutions."

Angela Priestley

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