Tue, 21 May 2013
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Legal services – a perfectly designed system...
The parody is accurate, but the only thing I'd add is that the relationships described are not necessarily truly dysfunctional. They may actually be giving both clients and lawyers what they want.
We are constantly told that the client sector is crying out for innovation, proactivity and better value, but is this really true? For many clients, especially corporates, legal is a low profile and minor area of expenditure, utterly dwarfed by other cost lines. Is it in any way worth the average plc investing significant management time in shaking up the way it buys legal services? You could hardly blame the average CEO, let alone GC, concluding that it is not. I suspect the status quo suits a lot of people on both sides of the fence just fine.
As for the hoary old hourly rate, the reason for its confounding endurance is that it does offer clients some benefits too, not least transparency and ease of comparison. It's pretty obvious that two similar law firms are going to devote a similar amount of time to papering any particular transaction. So comparing their hourly rates is a good way of getting them to compete on price. So-called fixed fee work is in fact quite opaque because the fee is almost never really fixed. If I were advising an in house team on its procurement management, there are several things I'd advise them to address before the hourly rate.
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