Re-Evaluating the Relationship between Corporate Legal Departments and Law Firms

According to results from the Legal Pricing and Project Management survey, published by Blickstein Group, the perception of how  law firms and legal departments end engagements differs substantially. Roughly 95% of firms do not internalize the event of not receiving business from a company after an engagement synonymous with being fired from their post. On the flip side, only about half of law departments consider firing an outside firm for a failure to comply with outside counsel guidelines. One half of the distribution of general counsel is more comfortable adjusting bills and warning their outside counsel to adhere more properly in the future. In either case, it’s become clear that while law firms don’t consider the end of a matter to be the end of an engagement, law departments are more inclined to operate under that assumption.

Ultimately, this distinction causes a few problems for the inside-outside counsel relationship. As matter centricity has become the operating standard for general counsels’ engagements with outside counsel, it’s important that law firms bring their best practices for each and every engagement. The 36% discrepancy between inside and outside counsel that have fired firms/been fired over OCGs means firms are not getting away with noncompliance as easily as they thought. This causes decreases in the quality and value of services delivered, which greater strains the relationship. If we had to pinpoint one reason why ALSPs have become so popular, it’s because of the way the model prioritizes tasks for specific matters to ensure the cost lines up properly with service expectation without the need for arduous negotiations.

Departments experiencing this type of relationship with their outside counsel are frustrated. At the end of the day, they have to answer to other stakeholders, and it’s not easy to justify legal spend that’s not decreasing in costs or increasing in value. If you’re a department having trouble with your outside counsel, now is the time to analyze their performance and decide the next steps for improving performance and communication on your next engagement.

For more information on how to leverage your spend and OCG compliance data for more efficient service delivery, check out our Legal Decoder for Corporate Legal Departments and contact us for a demo to see how we can better help you analyze your legal spend.