Archive for the ‘Law Departments’ Category

Most clients don’t want the lowest price available

October 30th, 2013 by Altman Weil

Altman Weil released its 14th annual Chief Legal Officer Survey last week, with lots of interesting data for corporate law departments as well as the law firms that serve them.  One of the most surprising survey findings involves pricing.  When asked about preferred outside counsel pricing scenarios, the over 200 Chief Legal Officers who participated in the survey overwhelmingly indicated that their preference is not for the lowest price they can get.

The survey outlined four possible law firm pricing options.  Here are client preferences:
 

  • Transparent pricing:  We want to understand how/why the price is set and have the opportunity to discuss changes - 36.4%
  • Guaranteed pricing: We want to know in advance what it will cost - 33.7%
  • Value-based pricing:  We want to pay a variable price based on the results we get - 20.3%
  • Lowest pricing: We want the lowest price available - 9.6%  
     

“If a rate discount is the only thing offered, law departments will certainly take it, but Chief Legal Officers are saying what they really want is predictability and control. So far this is a challenge that most law firms have been slow to address,” according to Altman Weil principal and survey author Dan Dilucchio.

Read it at Altman Weil

Law department cost cutting

February 20th, 2013 by Altman Weil

Pinhawk Law Technology Daily Digest points out a new blog post from the Corporate Executive Board on law department cost cutting and efficiency.  The CEB has analyzed in-house department budgets and identified common practices among those departments with lower than average costs, and therefore greater efficiency.  They describe nine trends, including:

  • Bringing more work in-house
  • Unbundling legal services and giving lower level tasks to non-law firms
  • Using smaller firms because they tend to charge less
  • Consolidating the department’s work with fewer firms to negotiate better rates

Law departments take note.  Law firms beware!

Read it at Corporate Executive Board

General Counsel Compensation

December 14th, 2012 by Altman Weil

The Association of Corporate Counsel is out with a new Law Department Comensation Survey.  They break the data into three segments for large, medium and small departments, according to a story in Corporate Counsel magazine today.

In large law departments:

  • GC base pay was $567,924 in 2012
  • Annual cash bonuses were an average $543,109  

GC comp in mid-sized departments:

  • $347,662 average salary
  • $210,900 average cash bonus

Read it at Corporate Counsel

Chief Legal Officers are pushing for change

November 5th, 2012 by Altman Weil

Corporate law departments report that they are re-negotiating outside counsel fees, shifting work to lower-priced law firms, increasing in-house capacity, opting for alternative service providers and using new technology — all to develop a more cost-effective legal services model — according to over 200 General Counsel who participated in the Altman Weil 2012 Chief Legal Officer Survey.

“Chief Legal Officers are not waiting for law firms to change their business models,” said Altman Weil principal Daniel J. DiLucchio.  “They are taking change into their own hands in 2012 to create a new internal value proposition.”

Read it at Altman Weil

Law school’s corporate laboratory

March 7th, 2012 by Altman Weil

Eleven big corporations, including Baxter International, have participated in an innovative University of Chicago Law School program begun in 2009 that gives law students real world experience and provides some free labor for law departments working under tight budget constraints.

“Baxter International, the global health care company based in Chicago, was feeling the economic pinch two years ago, and its legal department was looking for ways to cut costs. General counsel David Scharf found a unique answer: He turned several legal projects over to an innovative corporate lab at the University of Chicago Law School. And he’s been delighted with the results.

Baxter’s lawyers “coach” the students, often holding meetings with them in the company offices. “It’s a win-win,” Scharf says, explaining that the students receive real-world corporate legal experience while “we get outside law firm–quality projects done at no cost to us.”"

Read it at Corporate Counsel 

Cost cutting slows in corporate law departments

November 30th, 2011 by Altman Weil

Corporate law departments may be easing up on cost cutting according to Altman Weil’s 2011 Chief Legal Officer Survey.  More law departments have boosted their overall budgets in 2011, and more are increasing their expenditures on outside counsel.

Fifty-six percent of Chief Legal Officers (CLOs) surveyed in October 2011 indicated that they had increased their law department budgets from 2010 to 2011, compared to 51% who did so the prior year.  The median amount of the increase also rose, going from 6% in 2010 to 7% in 2011.  Forty-six percent of law departments increased their outside expenditures, compared to 43% last year. 

“These are not big changes,” says Altman Weil principal Daniel J. DiLucchio.  “It is the shift of direction that’s interesting as it may signal some softening of the hard line on spending that corporate law departments embraced in the last few years.”

Read it at Altman Weil

The power of the GC - continued

September 21st, 2011 by Altman Weil

Will much-talked about change in the law firm–client business model come from law firms or from their clients?  A new article in Corporate Counsel comes down squarely on the side of the client, and specifically the General Counsel.

“Unfortunately for law firms, the future of the legal industry will actually be presided over by the general counsel of the largest 5 percent of corporations, who among them control more than half of the $100 billion U.S. corporate legal services market. In fact, even within this small population, 80 percent of the market is controlled by a mere 200 GCs. These are the men and women who control the fate of the entire legal industry.”

How will it happen?

The author foresees a select group of activist General Counsel who will lead the charge, first by getting their in-house departments in order; “segmenting” or disaggregating legal work (i.e. categorizing work for “law firms, in-house teams, lawyers in India, contract administrators, software programs, etc.”); and then applying this new discipline to its outside providers.

When?

“There’s certainly no stampede under way, which, given all the talk, is curious. But a herd is forming, and I believe that within 12 months we’ll see segmentation or other change-management exercises under way in earnest across the majority of the Fortune 100. Thoughtfully and proactively remaking an industry allergic to change will require serious leadership. That leadership will come, not from law firms, but from their biggest clients. And it’s just begun.”

Read it at Corporate Counsel

Read our post on a recent Oxford University study with a slightly different take on the same topic

The power of the General Counsel

September 7th, 2011 by Altman Weil

Oxford University economist, Mari Sako, has published a new study, General Counsel with Power?,based on interviews with 52 General Counsel in the US and UK, including CISCO Systems, Goldman Sachs, Medtronic, and Yahoo.  Her focus is the power relationship between inhouse and and outside counsel, and the market forces that are disrupting the traditional balance between the two.

Corporate Counsel magazine summarizes the study:

In the end, Sako says, GCs have the upper hand in today’s economy, but that won’t always be the case. “Much of the bargaining power resulting from the economic climate is likely to erode when the economy picks up,” Sako writes. GCs can capitalize on their power “if they proactively invest in new capabilities such as project management,” she says. Yet in an alternate scenario, it might very well be that “we are heading for a supply side revolution with new entrants—legal service providers—driving discrete and disruptive changes in the way legal services are delivered.”

And Richard Suskind has written an interesting Afterword.

“From the transcripts of Professor’s Sako’s interviews, it is clear that some GCs think they themselves should drive innovation; but a larger proportion think that law firms should be leading the way.  Many law firms seem hesitant about this.  Yet, in the history of industry and commerce, customers or clients have rarely redefined the services they receive or the markets of which they are part.  That is the job of the provider.”

Read the summary at Coproporate Counsel

Download the study and afterword.

More on online auctions

August 19th, 2011 by Altman Weil

Following on the WSJ article on online auctions we noted earlier this month, WiredGC has published some interesting comments from Jeff Carr, GC at FMC Technologies.  FMC has been running internet-based auctions for legal work since 1998, and according to Carr “…they can work great in certain instances but they can be relationship destructive if used for every matter.”

He outlines FMC’s experience to date and under what circumstances he considers reverse aucitons to be appropriate:

“Here’s when we would consider use of a pure reverse auction:

1. When we have a new type of matter and we either have no incumbent firm or are dissatisfied with the firms we do have.

2. When there is a large volume of repetitive, low risk matters (e.g., slice and dice litigation, commercial leases, immigration, workers comp, EEOC, etc).

3. When we need to validate pricing/value from an incumbent service provider.

4. When we are pushing for adoption of new terms or conditions of service and the firms are resistant.”

Read it at WiredGC

General Counsel Compensation

July 21st, 2011 by Altman Weil

Corporate Counsel magazine has released its 2011  survey of the 100 highest paid GCs in the US.  The top earner was Altria Group GC, Denise Keane, with $6.5 million in total cash compensation.

The survey found:

“Stock options continue to fall out of favor (even though some lucky in-house lawyers are still getting those fat options), and cash remains king. Instead of getting bonuses just for being there, chief legal officers are getting extra cash, or, in the latest parlance, nonequity incentive compensation, which is tied to corporate performance goals. These payments, which rose by double digits, make up an increasing part of a chief legal officer’s pay packet. And restricted shares remain the most popular way to reward high performers with equity. In all, the word is diversity, rather than any one type of compensation.”

and…

“Total cash payments surged 18 percent in 2010. Ninety-three of the 100 top-paid general counsel received nonequity incentive compensation, while the number getting discretionary bonuses dipped from 23 to just 20.

That doesn’t surprise compensation experts, who have seen traditional bonuses cave in recent years under the weight of a battered economy. “During challenging economic times, companies are much more likely to require that compensation be earned through performance rather than granted based on past work,” says James Wilber, a principal of Newtown Square, Pennsylvania-based Altman Weil, Inc. “When that happens,” he says, “the at-risk component of compensation increases, and base compensation stagnates or even decreases.”

Read it at Corporate Counsel