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A survey of international General Counsels by TerraLex, a legal referral company, shines some light into what GCs look for when they hire outside counsel -- and how much law firms will have to improve to keep them satisfied.
The survey gathered input from 127 chief legal officers companies based in the United States and abroad. Its results highlight the importance of outside counsel in aiding with regulatory compliance and the frustrations many GCs face from law firms lack of industry expertise and expensive billing practices.
Hiring Legal Help
Though long-standing relationships play a strong role in hiring law firms, the report emphasizes the rise in competitive bidding. Almost half of general counsel use a competitive bidding process at some point to determine which outside firms to work with, a rise of 14 percent from last year. About 12 percent always use a competitive process, and 20 percent us it most of the time -- outnumbering the one in five GCs who never have competitive bids.
When they do select an outside firm, GCs look to expertise first and price second. For American in-house counsel, the third major concern is speed of response. Here, American in-house lawyers differ from their foreign counterparts, who are more concerned about a firms reputation than its speed.
Room For Improvement
Whether it's picking an outside firm or complaining about them, GCs have three things on their mind: expertise, price and speed. Not only do these determine who in-house counsel work with, they are the main areas that they think law firms need to improve upon.
When it comes to expertise, only a bit more than half of in-house counsel, 57 percent, think firms understand the needs of GCs. Those needs? Compliance. Almost a third of GCs ranked compliance threats from politics, law, regulation and governance, as the biggest risk to their business in the next year and a half. Private practice assistance in compliance is in high demand and over 60 percent think awareness of client's business needs to be improved.
Those concerns are quickly followed by the need to "maximize services and keep a lid on legal costs," according to the report. Sixty percent of GCs typically ask for alternatives to hourly billing. Many GCs think improving the use of technology and outsourcing are important ways to reduce the costs of representation. Speedy results can help reduce costs and keep businesses moving in rapidly changing regulatory regimes.
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