As Law Departments Push to Contain Costs, the Voice of the Client Should be Influencing Law Firms

Lauren Chung | May 10, 2018

According to HBR’s 2017 Law Department Survey, 82 percent of law departments expect their legal needs to increase over the next year. Yet, law departments also reported increased efforts to bring matters in house, which presents an interesting opportunity for forward-thinking law firms. Firms that are strategically examining and evolving legal service delivery models to better align with the needs of corporate clients will ultimately be able to differentiate in a rapidly changing market.

As law firms shape their strategies for this year and beyond, they should be acutely aware of the following areas of opportunity, as identified by corporate law department leaders in our annual survey:

  1. Providing access to technology for knowledge sharing and reporting of financial metrics. Currently, the top three technologies used by law departments are: e-Billing (78 percent), matter management (78 percent) and document management (66 percent). But law departments, often viewed as cost centers within their organizations, occasionally have difficulty establishing the buy-in necessary to implement new technology. This presents an opportunity for law firms to offer corporate clients access to law firm technology, such as project management, financial reporting and knowledge management tools to fill internal gaps – positioning themselves as a strategic partner. Firms that offer these types of value-added offerings differentiate themselves in the market.

  2. Creating a “win-win” pricing and budget strategy with alternative fee arrangements (AFAs). Eighty-five percent of law departments stated in the most recent survey that the use of AFAs is viewed as a top method for reducing outside counsel spend. Law firms, however, should view this as an opportunity versus a challenge. When executed correctly, AFAs – whether offering services at a flat-fee or on a contingency basis – should be a win-win both for law firms and law departments. Law departments are ultimately seeking predictability, so firms that proactively offer AFAs are demonstrating a desire to align with clients’ goals and objectives. To effectively build AFAs, law firms must be able to store and analyze historical data on cost, process and outcomes of matters. Firms that are confidently able to show they can deliver results consistently and on-budget will ultimately win the business of like-minded law departments.

  3. Understanding client needs and communicating feedback across internal teams. As organizations invest heavily in internal collaboration tools, law departments too have begun implementing workflow technology to streamline internal and external communication. According to HBR’s 2017 survey, more than a quarter of law departments are looking to implement workflow software this year. Law firms should take note and solicit performance feedback from clients and proactively share that feedback with the rest of the firm. This allows law firms to be more coordinated and better positioned to provide the highest level of service possible.

Law firms that proactively align with law departments’ goal of achieving operational efficiency will ultimately be the ones to stand out. In the end, firms with the foresight to embrace the changing needs of their clients will come out ahead.

The 2018 HBR Law Department Survey is now open for participation. To learn more about the survey, or to schedule a corporate law department trends briefing with your law firm, please contact me.