Trends in Alternative Billing & Convergence, Hildebrandt Survey Says

Maybe it can be chalked off to an economy stung by recession.  Or the fact that more legal technology providers are crowding the same space.  But something is changing the way in-house counsel relates to outside counsel.  And the effects could trickle down to the legal tech sector.

Hildebrandt International has released its annual Hildebrandt Law Department Survey, which provides benchmarking data for U.S. and global law departments. 

Here are a few interesting findings from the Hildebrandt Survey:

• For the first time in many years of tracking the issue, the Survey shows an increasing number of law departments adopting or expressing interest in alternative billing arrangements.
• In 2008, 33% of the companies indicated that alternative billing arrangements represented 11% or more of their total outside counsel spending. In 2009, 46% of the companies anticipate that alternative billing arrangements will represent 11% or more of their total outside counsel spending.
• Over half (56%) of the participants indicated that they are engaged in convergence activities.

What could these statistics mean for legal tech?

In looking to cut costs, rather than be forced to cut staffs, legal departments have turned to cost-saving measures such as alternative billing.  And this could eventually be passed on to legal technology vendors who provide vital tools for collecting, mining, sorting, and analyzing digital data.   The field of legal technology which was wide open just years ago, has experienced a steady fill of new firms, new technologies, and more specialized resources to address the ever-important e-Discovery process.  And where the legal technology sector could once bill contracting firms steep premiums for new and proprietary technology, alternative billing agreements between companies and outside counsel could could trickle down to mean a demand for more flat-fee packages between legal technology providers and outside counsel.

Adding to a trend of streamlining legal technology costs is convergence.  According to the Hildebrandt Survey, companies are continuing the trend of convergence, or reducing the number of law firms they engage---effectually meaning that they enlist fewer law firms to take care of multiple needs.  This one-stop shopping approach means that legal technology vendors may have to be more competitive in bidding e-Discovery assignments considering the potentially-smaller pool of outside counsel employers.

Though the landscape of in-house and outside counsel relations may be changing, the need for effective and reliable legal technology resources is still strong.  The going rate may just be a little more negotiable.

Related Resources:

• How to Budget for eDiscovery Costs (FindLaw's Technologist)
• States Embrace Electronic Discovery (FindLaw's Technologist)
• Building eDiscovery Teams (FindLaw's Technologist)
• Adapting to Changing e-Discovery Needs: r(e)-Discovery? (FindLaw's Technologist)