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Published On: November 2, 2014Categories: Litigation

In-House Legal Department Getting Huge Returns Shifting Work to Smaller Specialized Law Firms

It Pays (or Saves) to Use Smaller Law Firms

Some recent surveys show that in-house legal departments are getting real value just by shifting their resources to smaller law firms.

Trend: More Litigation and Increasing Risk, Decreasing Value Proposition by Corporations’ Traditional Law Firms

A survey conducted last year by Corporate Counsel shows that while compliance with new regulatory rules, in particular whistle blower and FCPA, overall litigation is on the rise and  major litigation is the single largest potential cost item.

A survey by Altman Weil shows that in 2012, shows that nearly 40% of legal departments had their budgets slashed by as much as as much as 10% of more. Nearly 35% of departments, on the other hand, saw their budgets increase by as much as 10% or more. In all cases, managing costs has become the top priority.

Smaller Firms Offer Positive Value Proposition: Shifting Work to Smaller Firms is Preferable to Service Cost Cutting

Another Altman Weil survey reported in the same pamphlet shows that 40% of legal departments were able to significantly improve their costs by shifting work to smaller law firms, and that most of them contended that it yielded the greatest reduction in costs without sacrificing their value proposition.

In house legal departments overwhelmingly preferred that their existing law firms offer a better value proposition: i.e., structure services and costs better as opposed to merely cutting their rates–which most CLAs found most law firms were not serious about doing.

Thus, small law firms’ ability to provide a better value proposition is showing promise and gaining ground in Corporate America.