Here's what's trending in the legal industry: (1) law firm mergers continue, (2) dissatisfaction of women in law firms, (3) blockchain and lawyers, (4) automating legal work, and more!
Here's what's trending in the legal industry: (1) General Counsel find that smaller law firms provide better service and are more innovative, (2) the traits and skills necessary for future lawyers, (3) a Gender Bias suit filed against a BigLaw firm, (4) the General Counsel is supposed to be a role model and moral leader, and (5) Legal Operations Chiefs are working with inadequate Legal Technology. And More!
As more businesses enter the global marketplace, the challenges of cross-border legal issues have risen dramatically. Language barriers and unfamiliar legal systems create a complicated environment for litigation issues that demand precision in reviewing and understanding discovery material. The cost for document review and human translation can escalate quickly.
To address the challenge of accuracy and cost, a host of translation services and technologies have evolved with litigation support specifically in mind.
If your law department or law firm is still delivering legal services the same way it was doing it 10 years ago, you’re behind. Change is happening because purchasers of legal service are demanding it and innovative legal service delivery models have entered the marketplace.
On October 25, 2017, we convened our 2017 Nimble Forum on Legal Industry Pressures, Operation Efficiency, and Pricing Strategies. Our first panel had a thought-provoking discussion on Legal Industry Pressures and identified 8 Key Trends in the Legal Industry. The idea of this Nimble Forum was spawned by our 2017 Legal Market Outlook Survey. You can get a complimentary copy of those results here.
Our great panelists for this topic were:
- Teresan Gilbert-Chief Intellectual Property Counsel at Lubrizol
- Nancy Berardinelli-Krantz-VP and Chief Counsel, Litigation at Eaton
- Bill Garcia-Chief Practice Innovation Officer at Thompson Hine LLP
- Rebecca Grunick-Senior Director at Black Letter Discovery
The 8 Key Trends identified in the discussion are:
1. Law Department Budget Cuts. Law Departments are expected to “Do More With Less.” Law Department Budget is not coming back. The law department is expected to act like every other department and create efficiencies and help provide some return on investment. Sometimes this means creating self-help tools to enable non-lawyers to do some of the work that the law department used to do. Other times it means finding ways to use technology to automate tasks. Law departments and law firms are sitting on a lot of unmined data. By gathering the data and interpreting it, law departments and law firms can make many more strategic and prioritization legal spend decisions, which transitions nicely to #2.
2. Legal Operations. Law departments and law firms are sitting on a mountain of data. Lawyers need to adapt how they work and start to see some of what they do as a repeatable process. Every litigation has similar steps, a similar process. Each acquisition transaction is different in some way but, in general, the overall process is the same. There are organizations like CLOC (the Corporate Legal Operations Consortium), that are pushing for standardization of legal processes.
3. Innovation. From alternative legal service providers to legal technology to CLOC there is a ton of innovation going on in the legal industry. Each is innovating legal service delivery. The widespread adoption of these innovators has been slower than in other industries because lawyers are typically risk adverse. Law firms that partner with alternative legal service providers are seen as innovative and progressive by purchasers of legal service.
4. Talent Development and Management. It is not enough to be a “good lawyer.” Within law departments, the lawyers also have to be legal operations specialists. Business acumen is critical. You have to be able to provide strategic data and metrics to your business partners. Many senior lawyers are aiming to avoid change because they think they’ll be gone before they are forced to. Many younger lawyers are hungry for change and innovation. What does the role of a lawyer look like in 5 to 10 years? Will law firms hire a non-lawyer sales force? How are law departments and law firms developing their talent pools? What is the succession planning for baby boomers?
5. Diversity and Inclusion. Purchasers of legal service are serious about their commitment to diversity and inclusion and are ceasing to do work with law firms that are not showing a similar commitment. Eaton has a goal of one-third of their North American outside legal spend going to diverse firms.
6. Feedback and Continuous Improvement. More and more law departments are conducting a formal annual review process of their legal service providers. Law departments want their law firms to reciprocate with client satisfaction surveys and performance review meetings. Law departments are looking for true business partners that add value, continuously get better, and provide business intelligence. This is the type of relationship building they are looking for and not tickets to basketball games and concerts.
7. Convergence/Consolidation. Tied to #7 and the annual review process is the consolidation of legal service providers. This is an ongoing trend and the law departments represented on our panel talked about how they removed up to 10 law firms last year due to performance issues whether that be efficiency or what was viewed as a lack of commitment to diversity. Consolidation of legal service providers allows the law department to wield more pricing power soliciting larger volume discounts.
8. Cost Certainty. Purchasers of legal service are looking for cost certainty. That is not going to change. Law firms continue to struggle with budgets. “I need a number not a range.” Law firms are failing to proactively offer alternative fee arrangements. Meanwhile, law departments are getting more sophisticated with their data. They know what most types of matters should cost because they’ve mined that data. Law departments are looking for cost certainty and creativity when it comes to pricing. Proposing hourly rate structures in RFP responses is viewed negatively.
If you thought this discussion was great, come to our next Nimble Forum on Hiring & Culture: Best Practices. We have another great group of panelists. Click Here for more information.
If you looking to improve your legal service provider selection process, take a look at the Nimble Guide to the Legal Service Provider Selection Process by clicking here.
U.S. Companies spend 166% more on legal services per dollar of revenue than companies outside of the U.S., according to research by Acritas and as reported by Jennifer Williams-Alvarez of Corporate Counsel. See http://www.corpcounsel.com/home/id=1202787039745/US-Companies-Are-Biggest-Spenders-on-Legal-Services-Globally?mcode=1202617073467&curindex=2
In addition, Acritas provided some key legal spend benchmarks:
Median legal spend at U.S. Companies is 0.40% of revenue.
Median legal spend at Companies in the rest of the world is 0.15% of revenue.
Median legal spend in the real estate industry is 0.89% of revenue.
Median legal spend in the banking industry is 0.60% of revenue.
Median legal spend in the tech industry is 0.45% of revenue.
Why is Legal Spend in the U.S. so much higher than the Rest of the World? Here are 4 leading reasons why:
In general, U.S. law firms charge higher hourly rates than law firms outside the U.S.
The compensation for both in-house and external lawyers are generally higher in the U.S.
There is more widespread use of the hourly rate in the U.S. than in the rest of the world.
The U.S. is much more litigious market and there is greater regulatory oversight.
What can companies and law departments do to drive more value from their legal spend?
Because it can be difficult to find sufficient time to step back and look at this, more and more companies and law departments are using legal consultants to review and recommend new approaches, or creating legal operations roles, or both.
Work with your key legal service providers to develop cost certainty for higher repeatable legal work provided and move away from the billable hour for those types of services.
Use a legal consultant to review the management of your litigation portfolio. Can it be bundled and offered to 1 law firm for more cost certain pricing? Can there be bonus fees for law firms if certain types of litigation matters if a motion to dismiss or motion for summary judgment is awarded in your favor? Can discovery costs be managed better?
Revise all of your form contracts with suppliers and customers to include mandatory mediation to try to resolve disputes. In our experience, many contract related disputes can be resolved through mediation - saving both parties significant legal costs.