Traditionally, big law firms and corporate legal departments have enjoyed a close relationship—one that is based on both trust and regulation. Clients rely on firms to discern legal boundaries and the risks associated with misjudging them; counsel are under a professional obligation to identify and raise potential problems and to handle them competently and thoroughly. Most corporate legal work is outsourced, because it’s not cost-effective to employ enough in-house lawyers to meet companies’ diverse needs. And work is allocated by in-house lawyers, most of whom started their careers and were trained at law firms.
Points of Law: Unbundling Corporate Legal Services to Unlock Value
Reprint: R1207M
The traditionally close relationship between corporate legal departments and big law firms is being disrupted—in part because the former are concerned about costs and lack of accountability. But executives now have many more choices about how to get their legal work done: They can use technology to do document search, bring in high-end temporary lawyers to manage major projects, or send routine processing work overseas. It’s tempting for legal departments to react to these new options by asking, “How can we acquire the same services at a lower cost?” But aiming for relatively small, short-term savings could critically damage important relationships, the authors write. Instead, corporations should seize this chance to do four important things: assign legal work to the providers best suited to a particular task; lower legal costs without sacrificing quality; achieve greater transparency and accountability; and derive greater value from in-house counsel.