More GCs Cutting Costs By Reducing Outside Counsel Work

Nearly half of corporate legal departments plan on cutting back on use of outside counsel within the next year, while adding in-house staff, according to Altman Weil’s 2013 Chief Legal Officer Survey. The survey found that 42 percent of CLOs plan to expand the in-house practice as part of an effort to control costs. Nearly half said they were decreasing their outside counsel budget by shifting work to lower-priced firms, reducing overall amount of work given to outside counsel. They also plan to shift in-house work from lawyers to paraprofessionals, use contract lawyers, increase efficiency with technology, and outsource to non-law-firm vendors. Forty-seven percent of CLOs reported they were cutting their outside counsel budgets, up from 39 percent in 2012 and just 25 percent in 2011.

When they do enlist outside counsel, CLOs in the survey said better budget forecasting and open, flexible billing topped their list of hoped-for improvements. More than a third of survey respondents said they value transparent pricing – and the opportunity to discuss changes – over guaranteed pricing, value-based pricing, or even lowest price available. “If a rate discount is the only thing offered, law departments will certainly take it, but Chief Legal Officers are saying what they really want is predictability and control,” Altman Weil wrote in its survey analysis. “So far this is a challenge that most law firms have been slow to address.”