Buyers of corporate legal services, in 2016, are sophisticated and savvy when it comes to finding the right suppliers to meet their needs. This is also a very difficult task to achieve given the complexity of many commercial legal issues.
In this context, this article explores the question of, when it comes to selecting law firms, does one size really fit all?
This perspective is explored by a February 2016 article in the Australian Financial Review, “In-house teams turn away from big law firms”, which highlighted that in-house corporate counsel are focusing on strategic sourcing of legal services to rein in corporate legal spend.
Maria Polcyznski, head of group legal at Adelaide and Bendigo Bank, told the AFR that the bank was turning to alternative providers where it could access top-quality legal experts on contracts for specialised advice or projects, and these providers were two-thirds the price of traditional firms.
Law firms are also recognising that in-house counsel are changing the way they select law firms. In an 8 April 2016 interview with the Australian Financial Review, Howard Adams, EY’s Asia-Pacific region law leader, observed that “more and more we are seeing legal buyers cherry-picking the service providers they want rather than sticking with one that does everything for them.”
Recent research by IBISWorld highlights that this trend will not be going away. According to a report in Australasian Lawyer, IBISWorld senior industry analyst Tristan Williams says that over the next five years, larger law firms would take a hit as local clients switched to mid-tier and specialist firms in the belief the top tier was too expensive or focused on international transactions.
For in-house counsel, when considering the question of “who is interested in doing my legal work?” there is a plethora of choice amongst top-tier, mid-tier, quality boutique and international firms, and there are significant benefits to exploring different firms and understanding who is best placed to be doing the work on a matter by matter basis.
Top-tier firms may be price competitive on certain matters, depending on a number of variables at any given time; likewise, boutique firms can have excellent senior lawyers who may be able to effectively halve the legal costs for a client and still deliver the best legal service.
Unfortunately, companies won’t experience these types of benefits unless they go through a procurement process for each matter.
As seen with Adelaide and Bendigo bank, the impact on legal budget can be significant, without impacting the quality of the advice received or the time taken to complete a matter.
Possibly one of the biggest hurdles to undertaking this procurement exercise is expertise in this area, which is why we are seeing a specialised procurement function playing a significantly greater role in companies’ buying decisions when it comes to legal services, as noted by Dr. Silvia Hodges Silverstein, executive director at Buying Legal Council. Notably, the complexity of legal issues makes if difficult for companies to be able to compare law firms especially across different law firm types.
“It is in our interest that there is someone capable helping clients compare apples with apples when choosing external counsel”, said a Partner at a US-headquartered international law firm, San Francisco in an interview with Lawcadia.
At Lawcadia, we understand the importance of being able to accurately determine which law firm is the right fit for each matter, and Lawcadia’s Procurement Tool is designed specifically for this. To find out more visit us at Lawcadia.com.
