This is an insightful opinion about the struggles of the traditional law firm model, especially the PPP model, and the rise of in-house teams as well as alternative providers.
Whether it was the recession that caused in-house teams to start looking outside the traditional law firm model or the perfect timing of alternative providers such as Halebury and LOD that launched in 2008, what is clear is that the market has opened up.
GCs and businesses are looking at their options which range from LPO models, to alternative providers to technology solutions. Of course it is about pricing, but it is also about creating efficiencies and an overall effective solution that is sustainable for the longer term. And to add to this dimension, GCs and C-Suite Executives are working more closely with their procurement teams and CFOs, which has added a level of sophistication to the legal procurement process; it is about cost, adding value, creating efficiencies, managing risk but also about long term sustainability.
Unfortunately the PPP model is not a nimble model and therefore most have been slow to respond and adapt in a now fast moving market place.
But it’s not just cost that accounts for law firms losing ground to corporate legal departments. Some additional reasons why in-house departments are expanding include: (1) superior knowledge of the client’s business; (2) relevant legal expertise; (3) unnecessary to hire law firms to handle an entire matter- expertise can be retained on a discrete basis; (4) better integration with client’s technology and business processes; (5) improved responsiveness; (6) maturation of legal supply chain (disaggregation); and (7) myth that law firms- and only firms-deliver “bespoke” services has been debunked.