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    Law Firms vs. In-House Counsel In a Changing Legal Environment


      I appreciate data-driven reporting as much as the next guy, but hearing from the trenches, from the people who are actually doing the work, who are experiencing and adjusting to changes in the legal profession, is meaningful in ways that analyzing raw numbers only doesn’t always provide. Such was the case at Bloomberg’s inaugural Big Law Business Summit on July 15, 2015 in New York City. Presenting, were in-house counsel at leading companies including General Electric, Colgate-Palmolive, Ford, Citi, and Anheuser-Busch, and leaders of massive law firms including Paul Hastings, Jenner & Block, Holland & Knight, Seyfarth Shaw, and DLA Piper. There were many others represented. It was an impressive gathering.

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      Here are some of the highlights.

      Challenges and Action in a Changing Environment

      Inside Counsel

      • Handle changing political and cultural issues globally
      • Deal with cyberthreats
      • Manage increasing cost of lawyering
      • Outside counsel cost increasing faster than the rate of inflation
      • Transform culture within the company’s legal department
      • Simplification – drive down oversight cost, remove unnecessary workflows, simplify contracts, NDAs, and other documents
      • Become more customer driven instead of process driven
      • Empower local lawyers, create centers of excellence and leverage experts around practice areas
      • Reduce outside spend through convergence process
      • Leverage IT solutions

      Law Firms

      • Legal services is buyers market
      • Outside counsel wants more fixed, flat, or contingency fee arrangements, better matter management, and training
      • Companies shifting work from large firms to small, regional firms
      • Companies want matters staffed with lawyers that have expertise, not junior attorneys
      • Inside counsel wants law firms to know their products and understand their business vision; to think of themselves as a trusted business partner and legal advisor – a full member of the business team that can be counted on to be creative, candid, and firm
      • Firms have to be fast and adaptable. Cyber threats and IP protection are two examples
      • Keep things simple – focus on doing what’s most important and discarding what isn’t
      • Need strong project management skills

      New Law Firm Competitor: In-House Counsel

      Choosing to go in-house

      • Proactive risk management driven from the inside which helps identify matters before they escalate into a crisis
      • Corporate legal departments are growing with internal/external spend shifting in favor of inside
      • Increasing pressure to manage spend

      Changing role of general counsel

      • Globalization – more sharing of information and resources
      • Lawyers have a seat on management teams
      • Shift away from individual offices to open spaces
      • Companies are investing more heavily in inside team
      • In-house team manages outside lawyers, not the other way around
      • E-Discovery now being handled in-house

      Which law firms in-house counsel hire

      • Hire individual attorney rather than law firm
      • Mix and match with small, lower-cost law firms with particular expertise
      • If you’re not the right firm, drop out early instead of having a fight later
      • Hourly rate is not a friend of inside counsel. Offer fixed fees
      • Use e-Auctions
      • Use  RFP process for big-ticket items
      • Law firms must be “hungry” and “flexible”
      • Have same travel and expenditure policy as company
      • Have detailed billing deadlines
      • Want to see women and people of color on law firm team
      • Focus on financial metrics and rigor
      • Understand what tasks you have and what you’re trying to achieve
      • Understand in-house language
      • What types of technology and best practices does the firm bring to the table?
      • Proactively identify costs and risk
      • Respond quickly

      Why lawyers are leaving firms for in-house jobs

      • In-house feels like a team
      • Range of issues is breathtaking
      • Advocacy
      • Become jack of all trades
      • Managerial opportunties

      What companies are looking for if you want to go in-house

      • Consider risk management vs. cost savings
      • Be passionate about fear
      • Open to doing something different in the company in 4-5 years and not just in legal (finance, sales, acquisitions)
      • Open to internal mobility (corporate lawyer to production lawyer)

      Law firms adjust

      • Offer virtual, secure platforms with access anywhere, anytime
      • Project management initiatives, including hiring non-lawyer managers
      • Drive a culture of innovation
      • Focus on relationship with clients, including communications, training, and building long-term relationships
      • Enhance industry-specific expertise
      • Diversity initiatives
      • High level of transparency
      • Go from “me” culture to “team” culture. No such thing as “my client.”
      • More public service and pro bono work

      Identifying areas for improved law firm efficiencies

      • Don’t start with cheaper
      • Consider Lean Sigma
      • Design thinking in addition to process
      • Process – see delivery as a process – what’s the smartest way to get things done
      • Not doing more for less but less for less – cut out what’s not working
      • Learn how to use new technology more efficiently
      • Training
      • Skill set to work in a multi-disciplinary field
      • Overcome redundancies in offices with multiple locations
      • Recognize small victories and success and build on it
      • Improve communication. Meet people where they are and move forward
      • Transparency, develop trust, get small buy-ins

      For more, check out Ron Friedmann’s six #BigLawSummit posts which he live-blogged from the conference, and a wrap-up of the social chatter from LexBlog.

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