November 01, 2007

ACC Survey Reveals Key Trends with In-House Counsel

Law.com has a great AP write-up on the 2007 ACC/Serengeti Managing Outside Counsel Survey, a collaboration between the Association of Corporate Counsel (ACC) and Serengeti Law, released at ACC's Annual Meeting on Monday in Chicago.

From my perspective, here are some of the key take-aways:

1. In-house counsel are utilizing more systems, such as e-billing and matter management, to perform more business intelligence (BI) and metrics-based evaluations of their outside counsel's performance.

This should come as no surprise to anyone working with corporate legal technology. Better tools exist today, and law departments are able to either consolidate some of their data silos or at least push/pull data more meaningfully from various sources. More comprehensive reporting tools and dashboards enable more insightful analyses and comparisons of outside counsel performance on a number of key indexes. In addition, matter-centric systems allow better data normalization, data integrity, and integration of workflows.

In addition, in-house counsel are much more likely to use these systems to maximize discounts for early payments, also known as fast-pays. When outside counsel budgets are in the millions, or hundreds of millions, even a small discount adds up to significant dollars. In return, outside counsel benefit by having on-time and reliable positive cash flows with little or no collection effort.

2. Law firm extranets are declining as in-house counsel prefer to utilize client-centric systems.

It's difficult to do proper BI and pull your data together if it's spread among both in-house and a number of outside firms' systems. A common complaint among in-house counsel is having to log into multiple outside counsel and in-house systems to gain access to all their information. Depending upon the number of outside firms, it can be inefficient for in-house counsel to learn how to navigate different outside systems and manage multiple logins. In my opinion, internal (or alternatively, some ASP-hosted) web-based systems are on the rise for ease of access and collaboration while reducing desktop support.

3. As a result, corporate counsel are setting more rules for their relationship with outside counsel.

This goes beyond setting billing rates, as corporate counsel are including requirements for early assessments and regular updates, as well as technology expectations and data formats. In-house counsel are likely to continue increasing the number of rules in their outside counsel guidelines.

4. Corporations have heightened legal compliance concerns.

The complexity of regulatory requirements is increasing, along with high-profile investigations and trials involving executives and in-house counsel. While other costs are being managed more tightly, this is an area where in-house counsel are likely more willing to engage outside counsel and potentially increase budgets for this work. This presents outside counsel with additional client service and revenue opportunities, along with opportunities to further cement their relationship with upper-ranking corporate counsel.

5. Convergence of outside firms continues, but is not exceeding expectations.

About a quarter of corporate law departments surveyed use convergence (working with a smaller number of firms) to achieve better rates, efficiencies, and consistency of work. However, most companies reported that it only met (i.e., did not exceed) their expectations. Even though there was a drop from the previous year, the AP article also reported the median number of outside firms remained fairly steady when looking at past years' data overall. This suggests to me the following:

  • Convergence is a useful management tool which will likely continue; however:

  • Most of the significant reductions have already been achieved for those companies who've been using this technique for several years.

  • Thus I'd expect those companies to continue convergence in "maintenance mode".

  • Savvy law departments are now looking for other ways, such as BI metrics, to better manage outside counsel costs.
From my experience, none of these should have presented any real surprise. However, it's good feedback to validate where in-house counsel are headed both technologically and in managing their outside counsel. Overall, in-house counsel are becoming more information-driven, are updating their technological tools, and are taking greater interest and participation in their outside counsel relationships. For the corporations they counsel, that's good news.

Topic(s):   Law Practice Management  |  Legal Technology
Posted by Jeff Beard
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