The view from in-house

In-house, to borrow a construction from LP Hartley, is a foreign country; they view things differently there. In the context of the immediate past, that includes the view on law firm fees. For the most part, the resilience of law firms as businesses through the challenge of the pandemic’s restrictions has been a cause for celebration. In what now feels like fairly short order, we went from position of panic, whereby mighty City firms claimed furlough money from the Treasury, to a situation where many repaid that money, and then on to new highs for profits per equity partner. The salaries on offer to newly qualified lawyers in the City would have been unimaginable even to those elevated to partnership in the last round of promotions. 

It is remarkable. But of course, a bonanza for elite firms has been paid for out of the pressurised budgets of in-house legal departments. In many cases, corporate clients have had little choice but to pay up. There really have been an awful lot of unlooked for disruptions to business life since 2016, and facing them without external legal resource has not been an option.

Yet, as we report in this week’s feature, general counsel are far from passive recipients of City billing. They are willing to shop around, confident in growing their own teams where justified, and are actively looking at solutions in legal tech. Few law firms are regarded as a one-stop shop – lawyer-on-demand service providers are among the patchwork of solutions being used.

To a long-term observer of this sector, which I have become, what is also interesting is a developing language used in-house around value and values. In fact, according to research by Thomson Reuters, cost minimisation is only third on the list of in-house priorities.

Value is delivered where law firms find ways to act in partnership with in-house teams, and develop the commercial sense to see the same priorities as their clients. In that context, the speed and service that come at a cost need to occur in the areas where the client needs them.

And client priorities include values. Companies are increasingly sensitive to charges like ‘greenwashing’, and as they feel the heat through scrutiny of ESG claims, they expect their legal advisers to measure up. Where firms do measure up, they will find in-house departments are also happier to pay up.