External counsel ‘failing to pass on technology savings’ to in-house clients

Cutting-edge technology has numerous benefits, but one of the key reasons organisations innovate their systems is to reduce costs.

 

Automation enables businesses to streamline previously laborious processes, freeing up employees to perform more growth-oriented tasks.

 

The legal sector has traditionally been slow to adopt new technologies, but many firms have realised in recent years that they risk obsolescence if they refuse to evolve.

 

However, while legal departments and lawyers themselves may be more open to change, it may take a while for the wider organisation to catch up.

 

A recent Eversheds and Winmark survey revealed that two-thirds of in-house teams are struggling to secure budgets to update technology, while 33 per cent believe lawyers don’t have the required skills to optimise tech usage.

 

This is why some organisations outsource work to legal service providers. But are in-house teams benefiting from the cost savings that external counsel are making through technology?

Firms failing to lower fees

The Lawyer’s Global Litigation 50 2017 report, sponsored by FTI Consulting, showed that in-house legal departments might be getting short-changed when it comes to the tech revolution.

 

Innovation has helped service providers drop their fees across multiple industries, but private law firms are dragging their feet when it comes to passing on these savings.

 

Half of in-house lawyers claimed they received 0 per cent cost savings from their external counsel using the latest technologies. Just two per cent received lower fees of between 31 and 50 per cent, while seven per cent enjoyed savings of up to 20 per cent.

 

Nevertheless, Thomson Reuters recently revealed that innovative service delivery is one of the most important factors swaying in-house teams when choosing external legal providers.

 

It was deemed more crucial than personal relationships with senior decision-makers, corporate social responsibility and the size and reach of international networks.

 

“Technology is revolutionising the way lawyers practise their trade,” stated Craig Earnshaw, senior managing director of FTI Consulting.

 

“To deliver the greatest value to their clients, lawyers must know about the latest in litigation technology.”

Will in-house firms internalise more processes?

Despite Mr Earnshaw’s comments, it appears in-house lawyers are sceptical of the tech capabilities of external counsel.

 

A mere seven per cent said they thought law firms were better equipped to meet clients’ tech demands than the Big Four accountancy companies.

 

What does this mean for the in-house legal recruitment market? While it’s often difficult to predict future trends, more organisations may choose to perform more legal processes internally if private firms refuse to lower fees.

 

As such, we expect that employers will want in-house lawyers to show an increasing awareness of the latest legal technology solutions, as well as the ability to identify and implement new systems where necessary.

 

Document automation, e-discovery software, client collaboration portals and case management systems are just some of the technologies with which in-house lawyers may need to become more familiar.

 

Please contact one of our consultants to discuss in-house legal vacancies.

 

Our Market Reports combine our review of the prevailing conditions in the in-house legal recruitment market together with the results of our latest employer survey.

 

Image: themacx via iStock