25 October 2016

The shift in buying power benefits in-house counsel


After the financial recession of 2007-2009, many changes are evident in the legal industry. Due to the unstable nature of the economy, clients have been more tentative in their dealings with legal services providers as well as more firm on the need for greater efficiency and lower fees.

The last few years has seen competition for legal work increase. Even in Australia, law firms cite that the number one issue that they face is finding new clients and winning work.1

As a result, law firms are now willing to take more risks and make more changes to secure clients.

Prior to the GFC, it could be said that there was a power imbalance, where clients were more dependent and reliant on their trusted legal advisor and would not jeopardise this unnecessarily. However, now there appears to be a shift. The client is now sitting in the driver’s seat at the discussion table.

One of the most notable changes we have observed is that clients are now more assertive when it comes to fee discussions. An example of this is the disapprobation of one of the most common trademarks of the legal industry, the billable hour.

Clients are now consistently seeking out alternative fee arrangements. Since law firms are more inclined to align their economic interests with that of their clients due to the economic effects of the recession law firms are having to develop different pricing models which then has a knock on effect of influencing the way that lawyers are rewarded, how matters are managed and the operating model of the firm.

There has often been a discomfort in discussing price between General Counsel and their external provider, mostly because both parties still need to work together and maintain a good relationship. Overcoming this and empowering General Counsels has been one of the drivers behind Lawcadia. As our legal procurement and management solutions provide transparency over fees, discussing costs and work-in-progress is now simpler – with less awkward conversations.

We believe that in an ideal world, clients and their chosen law firms can connect and in turn work together effectively and efficiently, and keeping law firms accountable and focused on client outcomes is the way forward.

“This also focuses on building a positive, mutually beneficial business relationship.”

Whilst no-one would want to repeat the economic and social impacts of the GFC, the influence this has had on the global legal market has been vigorous and healthy. These changes that are happening will only result in a legal market that operates with a greater integrity and rightfully placing the client organisation and value delivery at the centre.

If you want to find out more about legal procurement and the global trends that are influencing the buying of legal services, please connect with us here or download our Guide to Legal Procurement Part 1: An introduction to legal procurement.


ALPMA & Lexus Nexus Research, 2015

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