Are you happy with the Outside Counsel model?

Posted on 07-23-2015 by
Tags: corporate counsel , Trending News & Topics

If you are less than pleased with the typical reliance on outsiders to perform your company’s legal work you are not alone. According to Lexis Nexis ® Corporate Counsel Advisory, the 15th annual survey of Chief Legal Officers (CLO’s) was released. Altman Weil, Inc. released the responses of 186 legal officers. These questions covered subjects such as managing their corporate legal departments. The firm reported only 4 percent of the CLO’s were satisfied with the typical model of relying on outside counsel. Here are some other trends they found in their results:

Strategies for the Future

According to CLO’s who took the survey:

-  40 percent said that they have moved any work that was previously done by outside firms to in-house lawyers.

-  36 percent said they have moved their work to firms with lower fees. Many have used their newfound leverage in what has become a buyer’s market to control costs by obtaining price reductions from outside counsel, as well as alternative or fixed-fee arrangements.

-  About half of those surveyed received direct price reductions, typically between 6 and 10 percent, but more than a third of respondents received even higher discounts.

One trend that is on the rise is the increased workload for in-house law departments. The survey showed:

-  43 percent of those surveyed plan to add in-house lawyers to their staff

-  32 percent will be adding paralegals

-  21 percent will be hiring more administrative staff.

This “in-house” trend, as a result will have a negative effect on outsiders. In fact, 26 percent intend to reduce their use of outside counsel in general in the coming year, and of those, 85 percent said they plan to assign the work to in-house legal staff.

Roles for Outside Counsel

When it comes to the roles that outside counsels will play, the biggest issue isn’t the lack of role, but the money they’ll be paid. Over half of the responses in the survey said they would like to see a reduction in costs for use of outside counsel. Over a third of people asked for transparent pricing on any work but “bet the company” litigation, even asking for ability to changes in prices.

 What CLO’s Do

The report showed that CLO’s tend to spend their time “changing their hats” a lot , revealing a third of them say they spend their time advising executives. Twenty-three percent of their time managing their own departments while only twenty-five percent of their time actually practicing law. The remainder of their time is doing other miscellaneous tasks such as dealing with compliance issues, HR and security among other duties. One theme seen in the report is the CLO’s

Projections for 2015

If the trends that are illustrated in the report continue down the same path, we should not be surprised to see in-house law departments expanding- not only in terms of size, but in their areas of expertise and capability.

To read full details you can read entire report here.

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