Posted by: johnocunningham | November 15, 2016

Trends Among Chief Legal Officers

Legal consulting firm Altman Weil has released its 2016 survey of Chief Legal Officers (“CLOs”), which reveals some interesting stats on which I would like to offer the following comments:

  1. Efficiency. More than 60 percent of in-house law departments are improving their efficiency by improving their internal procedures and technology tools. Comment: Law firms should also be engaged in process improvement and technology innovation if they want to keep pace with their corporate clients, which are fast becoming their competition as in-house departments grow.
  2. Outside Counsel Cost Control. The key statistics I see here are that 40 percent of CLOs are reducing the matters sent to outside counsel, and 36 percent have shifted significant work to lower priced firms. Comment: This suggests that there is indeed a price point beyond which the corporate legal consumer will not spend, and the client solution is to bring the matters in-house or shift them to lower cost firms.
  3. Legal Service Competition. More than 80 percent of CLOs will bring more work in-house this year, and 57 percent will outsource legal work to non-law firm vendors. Comment: Law firms have to be aware of the pricing offered for legal services by technology solutions and outsourcing providers. They also need to know the rough cost of adding lawyers, overhead and support to in-house departments because that is who they now compete with. If you can demonstrate that you are a higher quality and more cost-effective solution vs. in-house competitors and alternative providers, then you can win more market share.

The legal services landscape is rapidly changing, and the pace of change is only likely to accelerate in the years ahead. Now more than ever it is crucial to understand the marketplace and communicate value to current and potential clients.

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