Following our posts on the respective Altman Weil surveys on CLOs and firms, we wanted to summarize and compare the results. In short: For corporations, change is good; for law firms, change is necessary.
The 2014 Altman Weil “Chief Legal Officer Survey” revealed two closely linked points: a major trend within corporate law departments to focus on decreasing outside counsel expenditures by not only flexing outside buying muscle, but also demonstrating more internal innovation. The survey summary noted, “Some CLOs really want law firms to be more efficient and to align with their department’s internal efforts to innovate legal service delivery.” The survey also revealed shifting work in-house has resulted in the greatest cost reduction. Of note, 40 percent have already shifted law firm work to in-house lawyer staff, including litigation.
The 2015 Altman Weil Flash Survey: “Law Firms in Transition” revealed the No. 1 reason law firms aren’t doing more to change the way they deliver legal services: “Clients aren’t asking for it,” said 63 percent of those surveyed. The survey comments, “Clients may not be asking for change — but they are showing law firms that they can and will take alternative measures themselves to achieve greater efficiency and economy.” In fact, 67 percent of law firms say they are currently losing business to corporate law department that are in-sourcing legal work.
In summary, in the current legal service delivery model, there are known pain points regarding costs, efficiency and aligning goals.
- Both firms and corporations are evolving to address these pain points.
- Firms are competing more and more for work against in-house departments.
- Winners from either side will have to be proactive and “hustle, be lean, be businesslike and understand and deliver client service and value to outperform” the competition.
The methods for addressing these concerns include:
- Improved collaboration and project management
- Use of technology for areas like budget forecasting
- Initiating and being prepared for discussions about pricing and staffing
A final note: With committed leadership at the helm, firms must be proactive and control the change and be part of the conversation with corporations.