Tough stance taken on outsourcing work

IN-HOUSE legal departments are getting tough when it comes to outsourcing, a survey reveals.

It shows that heads of legal departments are broadening the number of firms they use regularly when they out-source work and are driving down costs by negotiating better rates for their companies.

The survey, carried out by recruitment consultants Taylor Root, reveals that two thirds of legal directors who negotiate fees are knocking more than 10 per cent off the bill.

About 15 per cent of legal heads are cutting fees by more than a quarter.

About 80 per cent of in-house departments are currently negotiating fees and more than half those who do not, are planning to become more active in this respect.

The 1994 survey also reveals that heads of legal are now choosing from a wider pool of private firms compared to last year.

In 1993, Taylor Root revealed that nine per cent of legal departments used six or more regular firms.

This year the figure has more than doubled to 20 per cent.

Gareth Chambers, recruitment consultant, says the survey reveals that the “balance of power” continues to swing towards in-house departments.

“The changing distribution of work outsourced by in-house departments suggests that long-established relationships can no longer be taken for granted.

Law firms have been facing a two-pronged attack. Fees are being negotiated on an extraordinary scale and there is a gradual move towards expansion of in-house departments, he says.

The survey also reveals that the median hourly rate paid to partners in central London law firms is u250 compared to u150 in the provinces.

The going rate for assistants is u150 and u100 respectively.

Legal heads were asked to rank in order of importance the reasons why legal work is outsourced.

Lack of expertise, too few staff, and complexity of the particular issue were the reasons most often quoted as being significant.

About 15 per cent of legal heads cited company policy among the top three reasons and seven per cent listed the possibility of future redress for poor advice.

The survey also revealed that about a fifth of companies use psychometric testing when recruiting a lawyer.