International consulting and professional services company Deloitte recently published a global survey on the current state and future trends in purchasing legal services, based on research conducted between September 2015 and February 2016. Participants were legal or general counsel as well as CEOs and CFOs.
Results essentially confirm what we know and see happening in the legal industry. This confirmation should serve as an important reminder (and wake-up call to some) that shifts in the business of law are becoming entrenched in the landscape. Whether a firm decides to follow this flow or choose its own path is a matter of strategy. What matters is to develop a strategy with the support and commitment of everyone in the firm.
We will summarize key findings from the Deloitte report, with a link to the website at the end if you are interested in knowing more.
Changing client purchasing expectations
Corporations continue to exercise more control and creativity in how they attain legal services. According to the report, many of the participants had recently taken or were considering a significant review of their legal suppliers, and more reporting it as an on-going process. These reviews are being driven by the desire to find a better way.
Specific expectations from legal service providers
- More relevant and better use of technology, especially sharing on integrated platforms.
- Advice on regulatory global compliance, with 49% saying legal spend on compliance is growing and is perceived as a major issue.
- Greater transparency and management of legal costs, with continued interest in fixed fees (30%) or some kind of value-based pricing (27%).
Non-traditional legal service providers
We should note that the survey was commissioned by Deloitte Legal, a division that employs both lawyers and tax and financial service professionals, to explain the bias in these two report findings:
- Demand for non-traditional legal service providers is increasing, with more than half reporting that they are willing to obtain legal services from a non-traditional firm offering a full spectrum of professional services.
- Clients are looking for multi-disciplinary advice that is more holistic and integrated across borders.
The Deloitte website makes clear that the company is aiming to be one of those non-traditional providers:
“Deloitte Legal is able to provide holistic guidance around strategic business decisions as well as offer support services that can increase efficiency and reduce the cost of some routine legal activities.”
In fact, Piet Hein Meeter, Deloitte Legal’s Global Managing Director, states quite directly:
“Our ambition is to become the law firm of the future.”
Finally, one of the survey questions is the following: (And 52% said yes, by the way.)
“Can you imagine a future where you would be happy to buy your legal services from a non-traditional law firm entity that provided a range of services?”
We are in no way questioning the integrity of the research, but simply conveying that Deloitte is looking to influence and confirm the market conditions that are in their own best interest.
Other findings worth noting:
Growing spend for legal services
The survey reports growth in demand and spend for legal services, particularly in the areas of regulatory compliance, mergers and acquisitions and litigation.
Legal service providers under review
The survey reports that clients are looking at traditional law firms with a critical eye, with 55% of survey respondents taking or considering a significant review of their outside counsel.
Client challenges in need of solutions
“Doing more with less” was cited as the top challenge clients are facing, followed by the speed of business, global compliance and appropriate use of technology.
About technology—yes, it’s increasing
While the majority have not replaced in-house lawyers with technology for routine legal tasks, more than half (52%) believe this will happen over the next five years.
These findings confirm what we are seeing with our corporate clients. And since we also consult to law firms, we see the flip side of the coin and the effect that these trends are having on firm finances and operations. No longer can law firms aim their competitive marketing efforts against other, similar law firms. They will have to broaden their view of, and response to, a competitive horizon that is looking very different.
Companies are seeking more holistic legal services that help them not only manage specific questions but help them anticipate legal challenges and compliance questions before they arise. They want broader value, not just winning lawsuits but providing early insightful advice to avoid costly matters in the first place.
For law firms to meet these needs, they will have to be run more efficiently and with greater technological sophistication to satisfy an increasingly savvy and demanding client.
To view the Deloitte report in its entirety, follow this link.