Younger and smarter in-house lawyers pushing change

Peter Godfrey
by |
The rise of younger and more sophisticated in-house lawyers is pushing demand for changes in the firms they left behind, a legal services expert has told Australasian Lawyer.  

Gleed Legal director Philip Gleed has told Australasian Lawyer that clients are also more aware of the competition between firms and are becoming better at seeking deals with more beneficial costing arrangements.

“The change in client demand is coming from two directions.  Firstly, it’s coming from an increase in competitive tendering processes, and secondly it is coming from the rise of sophisticated in-house counsel operations,” Gleed said.

Gleed explained that in-house counsel had a better idea of what legal services needed to be purchased on behalf of their companies and had a good sense of how to benefit from the competition present in the market.
     
“Given the age spread of in-house counsel – they’re typically lawyers under 40 who have worked with the billable hour – they bring with them the philosophy of wanting to avoid hourly billing,” Gleed said.

Rohan Harris, principal at Russell Kennedy lawyers, agreed that clients are becoming more informed and are looking for better value.

“I think clients want that and more certainty.  They know they will get good service but they also want good value for money and certainty about costs,” Harris said. 

However, Gleed also expressed concern about whether firms had the ability to deal with the increase in client scrutiny.

“I think many firms have the commercial savvy but what they lack is the will to be adventurous in terms of how they cost a proposal,” Gleed said.

“Firms have commercial drive and ability, but their habits are so ingrained that they can’t get outside of the square.  They fall back to the safety-net of hourly rates because that is what their competitors are doing.”

“Firms understand the commercial drivers of the business, but they don’t understand that their clients wouldn’t mind them showing more flexibility.” 

How can firms provide good value for money?  Share your thoughts below.
 
  • John Chisholm on 16/04/2014 6:03:59 PM

    I have some sympathy for both GB and Rudi.

    GB,in my experience and observations, at times it has been as hard moving in house counsel away from the billable hour as it has been their external lawyers. That is probably not surprising given many in house counsel come from private practice and "know the game" and by and large for all its misgivings have learned to live with the billable hour. I also add that many in house counsel know when their lawyer is not competent or confident in moving away from the billable hour so choose to stay with the devil they know.

    Increasingly though more and more in house counsel are working successfully with their external law firms in a collaborative way to come up with much better and fairer pricing models.

    Rudi, I agree whilst the billable hour still dominates (largely because firms internal measurement and rewards are based around time) more and more firms have ditched the billable hour. This will only increase as choices for clients become greater with start ups and disruptors,(some of whom are off shore) all of whom have entirely different pricing models to match their different service offerings.

  • Rudi on 15/04/2014 4:20:56 PM

    Hourly billing has been in longer than the under 40's! The greater focus on different billing models has been driven by increased competition and rise of firms prepared to charge for work on normal commercial terms. I don't know where GB gets his information from but my in house team attempt to get non hourly rates for as much work as possible. I have even gone offshore to get it.

  • GB on 11/04/2014 5:32:29 PM

    My experience is that it is in-house counsel that are wedded to the billable hour.

    They may have changed their career path because they did not like billables, but they use them in comparisons because some lack the experience to assess value.

    On a number of occasions I have been asked to provide hourly rates when a fixed price was quoted.

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