Posted by: johnocunningham | November 12, 2012

Chief Legal Officer Survey Raises Concerns for Law Firms

The responses of more than 200 general counsel to The 2012 Chief Legal Officer Survey by Altman Weil should be of concern to the law firms and lawyers who serve corporate clients. The survey notes, among other things, a continuing shifting of legal work to in-house staff and to non-traditional vendors.

The survey reveals that more than 72 percent of in-house staffing budgets are holding firm or going up, with nearly half on the upswing; however, nearly 66 percent of budgets for outside counsel are down or flat, with almost 40 percent going down.

Also, nearly a third of CLOs reported that they are using e-discovery vendors now, instead of law firms, on some cases (presumably the larger ones) and more than 25 percent are using specialized document review vendors rather than law firms on various matters (again, most likely large matters, where cost savings can be significant). More than half of corporate clients have launched formal in-house e-discovery programs as well, indicating that e-discovery is a significant concern for these corporations.

Outside counsel might also want to pay serious attention to the fact that CLOs are giving law firms an average score of little more than 3 (on a scale of 1 to 10) for how serious the law firms are about changing their business models to focus on delivering value to clients. That is a big red flag for law firms.

In order to get hired in the future, firms will need to focus more on delivering value and knowing a client’s business and industry. On a scale of 1 to 10, CLOs rated “demonstrated understanding of our business/industry” as a 9.6 factor in hiring decisions, far outpacing the quality of a law firm or lawyer’s written work or Website content, and even ranking a full point ahead of referrals from valued colleagues.

This 36-page survey by Altman Weil is worth reading, and gives outside counsel a good picture of what is going on “inside” the walls of their valued corporate clients.

 

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