Reevaluate Outside Counsel Relationships to Control In-House Legal Costs

According to an article by Priori Legal, there has been a change in mindset regarding how outside counsel is approached, with corporate legal departments now being directed to reassess their outside counsel relationships to manage costs and improve value.

The white paper “Turning Legal into a Value Center,” a collaborative effort between Priori Legal and the Corporate Legal Operations Consortium (CLOC), addresses this pressing need. It distills insights on outside counsel management from interviews with 16 industry leaders on practical strategies for legal operations professionals, highlighting right-sourcing and panel consolidation. 

Right-Sourcing

The concept of right-sourcing is crucial for optimizing legal spend. It involves directing legal work to the most cost-effective provider suitable for the task. By assessing the complexity, risk, and scope of work, legal departments can decide whether to engage Big Law firms for high-stakes cases or smaller firms and alternative legal service providers (ALSPs) for routine or less complex matters. 

Additional options include legal staffing firms, legal marketplaces, and other “New Law” companies. This tiered approach not only cuts costs but also broadens access to diverse legal resources, supporting both financial and diversity goals. 

Panel Consolidation

Building a preferred law firm panel is another method for reducing outside counsel costs. By consolidating the number of firms a legal department engages, companies can negotiate better terms such as fixed rates or volume discounts. This approach streamlines administrative tasks and deepens relationships with a select group of firms, enhancing work quality and consistency. 

It should be noted that effective management of outside counsel relationships also includes consistent application of policies to maximize the benefits of any established systems. Finally, it is important to balance consolidation with maintaining bargaining power and to review panel performance regularly, ensuring continued value.