As corporate legal departments continue to focus on controlling costs, they are bringing more work in house and becoming more selective about when and how they work with outside counsel. According to Robert Half Legal’s just-released white paper, Future Law Office: Delivering Maximum Value in a Cost-Conscious Legal Era, this is changing the relationship between legal departments and their law firms in a number of fundamental ways.
Corporate legal departments are becoming increasingly vocal and specific about their expectations. They are looking not only for cost savings but also greater transparency and improved communication from their law firms. And they want their outside counsel to develop more of an overall business perspective in addition to the legal perspective law firms have traditionally brought to the table. Corporate clients want to work with firms that can help them avoid or mitigate risk and advance their strategic objectives. This means they expect law firms to have a thorough understanding of their specific industry and business, sometimes even including a company’s technology systems. In response, some law firms are now closely studying the operating policies, cost control approaches and service quality assessments of businesses in a variety of industries.
Legal departments also are putting the practice of billing by the hour under the microscope. In fact, alternatives to the billable hour model are one of the most frequently considered concessions legal departments are demanding of their law firms. These include the use of fixed fees, contingency fees (paid only when the firm wins a case or otherwise gets a favorable result for the client), performance-based fees, and blended fees, which may be a combination of hourly rates and fixed fees.
Timeliness is also an issue for clients. Clients want to avoid materials being prepared and filed at the last minute, which often require expensive extensions of time.
As legal departments keep more matters in-house, they can save money by having work handled by associates, paralegals and support staff at a lesser cost than outsourcing these projects. After a point, however, this practice creates staffing shortages. The question for general counsel is at what point must they add staff to relieve current employees who have become pushed past their maximum.
With tight budgets, some departments are rearranging the portfolios of individual lawyers to better address areas where clients are demanding service the most. One company, for example, reduced staffing for capital projects and increased it in employment law and pensions law.
Counsel also are turning to the use of interim legal professionals to gain support when and where it is needed. Project lawyers and legal support professionals are brought in for initiatives ranging from document reviews – including the task of e-discovery, which is becoming more and more complex – to matters requiring senior-level assistance. This approach provides firms with the flexibility to staff up or down, as needs dictate, far more quickly and less expensively than with a team composed entirely of full-time employees. Many law offices are also using these arrangements to evaluate temporary professionals for permanent roles. In a 2010 Robert Half Legal survey of in-house lawyers, the projects for which survey respondents said they planned to use interim legal professionals the most were, in order, litigation, discovery, bankruptcy and foreclosure.
For a more detailed look at how the legal field is adapting to a changing environment, you can download a complimentary copy of the Robert Half Legal report, Future Law Office: Delivering Maximum Value in a Cost-Conscious Legal Era at www.roberthalflegal.com/futurelawoffice.
Charles A. Volkert is executive director of Robert Half Legal, a leading staffing service specializing in the placement of attorneys, paralegals, legal administrators and other legal professionals with law firms and corporate legal departments. Based in Menlo Park, Calif., Robert Half Legal has offices in major cities throughout the United States and Canada.