The Lawyer – Half of Legal Departments Struggle to Evaluate Vendors

Stacey Coote, Partner, Coote O’Grady

Stacey Coote provides analysis on The Lawyer’s fourth edition of its annual survey of in-house lawyers.

Evaluating trends and changes of attitudes among in-house lawyers, the research detailed in the report sparked 530 responses through its online questionnaire. Professionals who participated in the survey included General Counsels, Senior Counsels and Heads of Legal.

Topics covered in the report included banking & finance, energy & natural resources, government, public sector & not-for-profit, insurance & reinsurance, manufacturing, automotive, engineering & construction, media & entertainment, retail & consumer technology, IT and pharmaceuticals & biotech.

See below for our analysis of the report.

Growing budgets and budgetary restrictions

It is interesting to note that budgets are growing but budgetary restrictions are cited as a key challenge for in house teams – this highlights that firms are still not meeting the needs of their clients in regards to costs.

Changing external advisers

The fact that nearly 43 per cent of respondents had changed external advisers over the past year is quite amazing. Again, costs were the main reason for the change – this was confirmed by over 60 per cent of those surveyed. Last year only 40 per cent changed for costs, highlighting a growing disconnect between services provided by firms and perceived value.

2015 only: what were the main drivers around working with new external advisors?

Source: The Lawyer In-house Attitudes Report 2015 

I also wonder about the selection process for external advisers and if there are better ways for in-house teams to appoint firms (eg panel processes)? I cannot help but think it would make more sense to appoint firms for a longer period (eg 2-3 years) rather than annually, given the work involved in appointing a firm, learning curve for new firms etc.

Level of service & lack of evaluation

Service is clearly a big issue this year, with almost 50 per cent of respondents stating they had changed adviser due to the level of service received. This is a massive increase from 11.5 per cent last year and 14.3 per cent in 2013.

2015 only: has your organisation changed or refreshed the legal advisers you work with over the last year?
Source: The Lawyer In-house Attitudes Report 2015

Despite this, 64.2 per cent of those surveyed had no written evaluation process for the law firms. It strikes me that if you are terminating almost 50 per cent of your firms for poor service you should have a robust performance management programme in place and provide feedback to firms regularly to enable them to improve performance, rather than just terminating them for poor service.

Efficiency

Considering the cost-conscious nature of in-house teams (based on the findings of the survey), it is surprising that only 28.4 per cent of teams are using eBilling tools. Indeed, only 30 per cent of those surveyed planned to implement efficiency tools.

This raises an interesting question around eBilling and its effectiveness and why more in-house teams do not see the value of implementing the same, given the level of acceptance now that savings can be realised from implementation of eBilling solutions.

Legal process outsourcing

Given the concerns about costs throughout the report, the limited use of legal process outsourcing (LPO) organisations is surprising, with just 18.5 per cent of organisations using them.

Secondees

Interestingly, over a third of organisations are now using secondees. The questions raised in the report – ie whether secondees are filling roles where candidates cannot be found or whether the secondees are demonstrating how these specialists can add real value to in-house teams and driving recruitment – are pertinent.

However, from personal experience I think there is a third reason why secondees are being used: due to funding issues teams are using secondees to cover long-terms absences (sickness, maternity leave etc) and peaks in workload.

Conclusion

In summary, with the clear focus on costs from most of those surveyed, there is a big opportunity for organisations to consider alternative solutions around eBilling, LPO and how to performance manage firms to reduce the amount of time and effort spent hiring new law firms.

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