From The Business Journals
Attention, attorneys: your biggest corporate clients may be your biggest competition next year.
Some 40 percent of corporate legal departments expect to cut spending on law firms over the next 12 months and three-fourths of those will shift the work to their in-house staff. The remainder will use vendors or contract lawyers, according to consulting firm Altman Weil’s 16th annual survey of chief legal officers.
Some 285 chief legal officers nationally responded to the survey. Pittsburgh breakout was not available.
Results revealed that corporate law departments are striving to manage the inflow of work from their internal clients to maximize department performance. The most frequently reported effort — and also the most effective — is designating law department gatekeepers for specific business units or types of work.
“This also shows CLOs’ heightened awareness of the need to keep the law department focused on the highest value work and to maximize the effectiveness of often limited department resources,” said Rees Morrison, an Altman Weil principal Rees Morrison.
Chief Legal Officers responding to the survey cite internal and external cost pressures as their greatest concern in managing their law departments in 2015. Some 68 percent said they receive fee discounts from law firms, and 60 percent used alternative or fixed fee arrangements to cut costs.
The three service improvements/innovations those surveyed said they’d most like to see from their outside council were greater cost reduction (50 percent), improved budget forecasting (46 percent) and non-hourly pricing (36 percent).
William Pietragallo, founding partner of Pittsburgh-based Pietragallo Gordon Alfano Bosick & Raspanti LLP, said his firm has never had a complaint about cost.
“In the scheme of things, we’re not inexpensive, but we’re fair,” he said.
Pietragallo said his firm is proactive about costs.
“I work with them when I know they have a case that’s significant but the costs can be prolonged, particularly in litigation issues,” he said. “Just think of it. When a major corporation gets sued for a relatively small amount but it’s an important issue, if it was litigation from soup to nuts, it could cost more than the case is worth. I work with my clients, giving them some other arrangement, initiating the offer instead of waiting for them to ask that we’d handle it for a guaranteed price.”
William Lestitian, CEO and managing shareholder at Rothman Gordon PC, also based in downtown Pittsburgh, said his firm has been able to keep costs manageable by working closely with clients.
“We work with in-house counsel and constantly communicate about who’s doing what,” he said. “We’re smaller than some firms so it’s easier for us to do that.”
