In-house chiefs save money by negotiating rate cuts, using lower priced firms
10:38 am, November 6th, 2012
Legal consultancy Altman Weil’s latest survey asking in-house legal honchos how they are controlling costs found that negotiating price reductions with outside counsel is the most popular approach.
In the annual survey of chief legal officers, 71 percent of respondents said they re-negotiated outside fees in the past year. Almost half—47 percent—shifted work in-house and 41 percent shifted work being done by outside counsel to lower-priced firms. About a third—36 percent—reduced the total work they sent to firms, and 10 percent instituted a law firm convergence program.
More law departments (39 percent) decreased their outside counsel budget in 2012 than those that increased their outside spend (34 percent). This is the first time in three years that the percent of law departments decreasing their outside spend was higher than those making increases, according to Altman Weil.
Law departments are cutting costs internally as well. About a third (36 percent) shifted work in-house from lawyers to paralegals and 35 percent used contract lawyers. One fourth of respondents said they outsourced some work to non-law-firm vendors to save money.
In other findings, chief legal officers said the top factor in choosing outside counsel is demonstrating understanding of their business or industry—which they ranked 9.6 in importance on a 1 to 10 scale. In-house chiefs continue to express skepticism about firms’ willingness to change their service delivery model, rating firms’ change-willingness at 3 on a 1 to 10 scale.
There were 204 responses to the annual survey from the 1,297 corporate legal departments invited to participate—a 15.7 percent response rate.