Law Firms Have Room to Improve, General Counsel Say

May 7, 2015, 5:32 PM

Attorneys at law firms have work to do, a new survey of general counsel worldwide has found.

While lawyers “were making more effort to understand business needs and communicate better with their clients,’' 127 chief legal officers said that law firms could still offer better deals on fees, reduce costs through outsourcing and rely more on technology.

Regulation and compliance top the list of general counsel concerns. The other areas that vex top legal officers include “creating value for their companies’’ followed by “data protection, security and cyber issues.’'

The new findings are contained in “The General Counsel Excellence Report 2015,’' a survey sponsored by TerraLex, a referral network of more than 150 law firms in 100 countries, and conducted by the Global Legal Post, a London-based legal digest.

Of those surveyed, 23 worked at companies that were either headquartered or based in the U.S. Those working in the U.S. were similar to their global counterparts on many topics.

For example, when choosing law firms, general counsel worldwide cite expertise and price as the top two criteria. But when it comes to the third, the counsel diverge. While chief legal officers overseas rank relationships as the third most-important factor, U.S. counsel say that “speed of response’’ is the third most-important quality, Mary Heaney, the editor-in-chief of the survey said in an e-mail.

According to the survey, approximately 64 percent of general counsel said that communications with external law firms have improved, but that figure dropped to 57 percent when asked whether firms understood the business needs of the general counsel.

Satisfaction with communication differs by location, especially when it comes to feedback. Barely half – 53 percent – of U.S. general counsel “say their law firms are rarely in contact to see how satisfied the client is with the work compared with 33 percent globally,’' Heaney said in her e-mail.

And despite reports of fee-shopping, general counsel worldwide remain loyal to a small band of firms. Most general counsel – 81 percent – are in charge of selecting law firms, and half the respondents said they used longstanding relationships to retain firms for work.

About half of the survey’s respondents said they use only one to five domestic law firms in their home jurisdictions, while 31 percent said they use six to 10 law firms in their home countries. Only 11 percent said they use 11 to 20 firms, while 8 percent use 21 or more firms.

Of those participating, 48 percent said firms had offered better deals on fees, but two-thirds said firms weren’t helping enough by offering outsourcing options.

And if it seems like the pressure to explore alternative fee arrangements is steadily increasing, that’s because 60 percent of the respondents said they routinely ask law firms for alternatives to traditional hourly billing. Last year, only 47 percent sought alternative arrangements.

Another development is the continued use of competitive bidding. Approximately 45 percent of the general counsel responding to the survey said they occasionally use competitive bidding to distribute work to outside law firms, while 22 percent said they mostly use that technique, an increase from 14 percent last year. This year, 20 percent said they don’t use competitive bidding and only 12 percent said they “always’’ use the process.

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