When it comes to cutting costs, spend on external counsel is the primary target for in-house legal teams. In a current IACCM survey, 74% of participants say they are using fixed fee arrangements, detailed billing reviews and panel discounts.
Just over 50% have transferred some work back from outside law firms into their organization. Unlike most other business functions, a majority do not see new technology having a major impact on legal costs or resources in the short to medium term.
Law department budgets are under pressure. In common with other areas of the business, there are demands for cost reduction; but at the same time, workload in critical areas is increasing. Balancing these pressures is challenging and has led to a variety of techniques being deployed. However, their effectiveness is proving highly variable.
Is Procurement making inroads?
Legal spend is a category that many Chief Procurement Officers would like to control – but the survey shows that for most this remains a future ambition. Just under 13% of law departments say that they use Procurement on a regular basis to assist in external negotiation of fees or charges and only 6% are actively considering greater engagement.
Alternative fee arrangements – such as outcome or success-based – have likewise made little progress and only a small percentage anticipate future use.
Outsourcing, technology should offer solutions
While a significant proportion have experimented with captive or outsource centers as a source of cost reduction, satisfaction levels vary. Interviews suggest that this is frequently because the framework for success is missing. A reluctance to define procedures or to make use of technology, together with innate resistance to change, have clearly impacted results – and led to over 15% abandoning their efforts.
So perhaps technology will represent the great break-through? Certainly external commentators such as Richard Susskind believe this to be the case. So what about the in-house lawyers? Just over 10% consider there will be an impact in the next 12 months and almost 30% acknowledge that technology will affect internal resources and ways of working in the next 3 years. But for most, significnat change is felt to be at least 5 years away.
And when it happens, where do in-house lawyers believe the biggest impact will fall? That’s simple – it will be on the external law firms.
To participate in this confidential survey and receive the full results, click here. The report will be issued to participants on June 12th and will include insight to the most successful cost reduction techniques currently being used.