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It’s time for buyers of legal services to flex their muscles and demand higher quality at lower prices
In many organisations, the responsibility for buying legal services has traditionally fallen to senior members of the in-house legal team. Procurement professionals, long accepted in just about every other area of corporate expenditure, have found it hard to demonstrate added value in this area.
Yet a great lawyer does not automatically make a great buyer, any more than a great buyer would necessarily make a great lawyer. And, as we are seeing from our interactions with in-house legal teams and buyers, procurement has much to add in this area when it works closely with its legal colleagues.
Good procurement professionals are far less entangled in ingrained loyalties with suppliers, neither are they coloured by longstanding relationships. They are trained to be staunchly independent and analytical in their approach when surveying the landscape of providers. They can challenge norms.
While chairing a recent legal procurement conference I was struck by Anne-Marie Amatt’s experiences at energy giant E.on (The Lawyer, 24 September). She spent a great deal of time working with and convincing the in-house legal team to take a different approach. In doing so she used the simple question – why? Why do lawyers charge by the hour? Why don’t we receive comprehensive management information? Why aren’t we benchmarking lawyers in the same way as we do all our other suppliers?
It never ceases to amaze me how many businesses simply accept the hourly billing model, or ‘additional billing’, from law firms. It amazes me even more how many fail to measure their legal service providers effectively against KPIs that are aligned with their business objectives and appetite for risk.
But this is changing. We are entering an era in which the old adage ‘Nobody ever got fired for buying IBM’ is redundant in the legal market. There are now credible alternative offerings from well-financed and secure new entrants that deliver the holy grail - higher quality at lower prices. This is possible for many reasons, including the fact that many law firms have made excess profits for many years (which, by the way, is why the market is so interesting to new entrants and firms that can adapt quickly).
Customers, not law firm partners, are the winners in all this change. Law firms will have to get used to risk-share agreements, fixed pricing, free advice upfront and delivering legal advice the way a client wants it, not how a law firm delivers it. Law firms will have to survive and prosper with lower fees.
Indeed, it is not too dramatic to suggest that customers have it in their hands to change the legal services market forever. Change of the magnitude being experienced in the legal sector is no respecter of tradition and businesses should be no respecters of how they have used, measured and bought legal services historically.
Over to you general counsel and procurement – seize the moment.