Allen & Over's Global Survey Shows In-House Counsel Changing Work Models
Global law firm Allen & Overy's recent research publication titled "Unbundling a market - The appetite for new legal services models," focused on finding how, in the face of huge changes in the legal industry, companies and their General Counsel are innovating "the way they procure, use and interact with" law firms and other providers of legal services. The report is based on research with 198 general counsel and business contacts at big companies and financial institutions in 27 different countries. The research was conducted independently by Meridian West.
As an introduction to the report, the law firm says it commissioned the report to understand the critical issues involved in the rapid changes in the delivery of legal services around the world. And the results show that most of the respondents interviewed, who are senior buyers of legal services with a collective annual budget of GBP 3.5 billion, have increased the amount of work they do in house. Only 26% of the respondents said they had decreased giving work to external legal services providers.
Allen & Overy's report points at three fundamental areas where things are changing:
- Consolidation: Organizations are reducing the overall number of external law firms and going for deeper relationships with fewer firms
- Professionalization of procurement: One-third of the respondents said their procurement function now has a greater role to play in selecting external legal providers
- Legal trends are globalizing: More than half of the respondents from Middle East and Africa and half of those from Asia Pacific agree that trends in the U.S. and U.K legal industries follow through into their markets
The research found that new service delivery models are blooming and even though 58% of the legal budget of the respondents was spent on commissioning work to external law firms and legal services providers, how the resource is shared is evolving rapidly.
General Counsel are no more agreeing to hand over work to any particular law firm. Rather they are looking afresh at how tasks are approached, simplifying complex work into constituent components, and then dividing the work among multiple providers.
When asked about future preferences, most companies said they intent to increase their use of non-traditional legal service providers like contract lawyers, document review services, online legal services, hybrid legal solutions, legal consultants, and managed legal services.
The report observes, "Our analysis shows that organizations that are actively planning to decrease spending with traditional law firms are choosing to increase spending on other providers at a much higher rate." The trends represent a significant shift in spending patterns of in-house or general counsel, and will in the near future have a deep impact on how legal work is divided between in-house, law firms, and non-traditional legal services providers.
However, the days of traditional law firms are not over, and the report quotes the general counsel of a U.S. manufacturing company saying, "A one-stop shop, if offered efficiently and cost-effectively, would make our lives easier ... I believe this will be the future of legal services if law firms can provide this cost competitively."
However, change is a must, and as one general counsel of a multinational conglomerate pointed out, "The firms that sit around and think they are going to be able to just continue doing what they have done for the last 100 years are going to become redundant."
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