Are you feeling reticent about leveraging competition to shore-up the (likely long) list of firms with whom you work? You shouldn’t be. Here’s some great data to give you confidence that it is time to jump in the pool!
The Landscape of Legal Service Providers is Changing
The market for legal services continues to change and clients have multiple options beyond the traditional law firm.
- In-sourcing more work
- Using technology that reduces need for lawyers/paralegals
- Engaging alternative legal service providers
- Hiring big four accounting firms for global projects
- Leveraging non-traditional law firms
- Tapping into branded, managed networks of independent lawyers
A large majority of law firm leaders (85.4%) believes that increased competition from non-traditional service providers is a permanent change in the industry (Altman Weil 2018 Lawyers in Transition). All of these options are challenging demand for traditional law firm services. As a result, law firms are that much more interested in competing to win or to maintain your work.
Law Firms’ Internal Challenges Remain
Law firms are increasingly burdened by internal challenges. Per Altman Weil’s 2018 Law Firms in Transition:
- Equity partners are not busy enough in 51% of all law firms.
- Overcapacity is diluting profitability in 58% of all law firms.
Idle attorneys do not equal law firm profit. Firms would rather offer work at discounted rates than not do the work at all. As noted by Paul Theiss the chairman of Mayer Brown in a recent article by American Lawyer, “Law firms have a choice: They can view panels as a threat, or they can view panels as an opportunity. And we’ve chosen to view that as an opportunity.”
Your Incumbent Is Unlikely Charging You Market Rates
If you have not refreshed your panel in the past few years, it is unlikely that you are paying market pricing.
- Per the Altman Weil 2018 Law Firms in Transition, an overwhelming majority of law firm leaders believe that price competition is here to stay (95.5%)
- In a recent process at BanyanRFP, a client uncovered a wide range of fees for its strategic M&A work (the spread on the Average Hourly Rate charged by law firms participating in the RFP was 69%). This is a great example of important competition can be no matter the type of work. Leveraging competition is equally meaningful when top-tier, white-shoe firms are vying for your business.
The net: leveraging competition to hire outside counsel is expected and enables finding best fit counsel at best pricing.
About the Author: Kathy Heafey is President of BanyanRFP, a cloud-based RFP platform that helps companies control spend on legal services. She has over 20 years of management experience working with large brands such as Pillsbury, Green Giant and Progresso Soup. A proven leader in Cost Management and Continuous Improvement, she enabled over $20MM in annual cost-savings for General Mills and is now saving in-house legal teams millions of dollars as they find best-fit counsel for their legal work. For more information, visit www.BanyanRFP.com