In-house legal teams may be paying too much for legal services because they are sticking to traditional firms rather than sending work to alternative legal services providers, a new report suggests.

Obelisk Support, headed by solicitor Dana Denis-Smith, says the rise of alternative legal services providers in the 11 years since the first alternative business structure was licensed has provided general counsel with much-needed choice and diversity in their suppliers.

However, not all in-house lawyers are reaping the full benefit of a liberalised legal market.

Jenifer Swallow, a former GC, then head of LawtechUK, told the report that it is too easy for GCs and senior executives to take comfort from instructing a well-known law firm, even though it may be unnecessary, overpriced and not structured in a way that aligns with everyone’s interests.

Former Law Society president Christina Blacklaws, who set up the UK’s first ABS with the Co-op, said many in-house lawyers come from big City firms. They move in-house and ‘don’t have the bandwidth in their own teams to invest in the analysis needed to do things differently, even though there are cheaper, quicker and more accurate solutions out there that are technologically based and could be transformative for them’.

Christina Blacklaws

Blacklaws: 'Could be transformative'

Source: Michael Cross

Crispin Passmore, a former executive director at the Solicitors Regulation Authority, said GCs can too easily default to instructing the firm they trained at. ‘But this is the model that City law firms have developed', the report says.

‘As he bluntly puts it: “Recruit a bunch of lawyers, work a few to death, work a few to partnership and work a few into in-house.” However, as in-house teams start to train their own lawyers, along with some ALSPs and the Big Four, this is going to start to change.’

GCs hold the purse strings but choose to spend their money in traditional ways, Karl Chapman, who launched Riverview Law as an ABS in 2012, told the report. ‘They’ve been tremendously resistant to looking at alternatives. This is changing because the pressure is increasingly being put on the corporate legal function, plus there are maturing alternative delivery models, high-quality suppliers and proven technology solutions,’ he said.

A liberalised market keeps big law firms on their toes, Helen Lamprell, GC at Aveva, said.