This was a great event, as it blended leading C-level folks from law firms as well as leaders from many major in-house legal departments. The speakers represented a great cross-section of in-house counsel and law firms. For me, it's always helpful to be reminded of the pain points our clients are feeling and try to identify ways we can help.
One of the main themes was the continuing pressure in-house counsel face to reduce legal costs. This is squarely in opposition to the constant rate increases many firms are pushing on their clients. You know corporations are serious about cost-cutting when companies like Citigroup have someone with the title of "Director Legal Expense Control". The salary of first year associates was brought up routinely. If we think it's an issue within law firms, it's even more of a problem for our clients. They view the rate increases solely as a mechanism to help absorb these associate salary increases, while maintaining what I like to call a law firm's "stock price"- profits per partner. Think your firm is different and really listens to its clients' needs? Check out this article from Bruce MacEwen's blog - there's a huge disconnect between how our clients perceive us and how law firms view themselves as it relates to outside counsel satisfaction. One more piece of evidence to demonstrate the disconnect is found in the InsideCounsel Magazine's 18th annual survey. Clearly there is room for firms to proactively go to their clients with ideas on how to reduce legal expenses:
Offshoring and outsourcing of low-level legal work (like first-cut document review) has been the fashionable thing to talk about lately, but when talking to folks at legal departments, they didn't seem all that interesting in their law firms doing it - at least some of them. Much of a company's comfort level with off-shoring legal work seems to be directly linked to the company's own use of off-shoring for other functions. So, before you go down this path with a client, find out if the company currently does any off-shoring, you might save yourself some grief as there were several companies in the room that would take serious offense to it.
However, I think there are opportunities to help clients reduce litigation costs in the document review area. McDermott fired the first salvo recently, by creating a new tier of associates. Think of them as permanent contract associates -- to handle lower-end tasks at lower billing rates. I was also told during the week that there is a surplus of lawyers in cities like Detroit and Charlotte, as a result you can get contract lawyers in those cities at rates not much higher than that of Indian off-shoring companies. I heard of one firm that setup an office in Charlotte simply to conduct document review, taking advantage of this talent surplus.
The takeaway for me was, and has been for a while, that we need to truly listen to our clients needs and pain points and take real actions to help them.