Growth & Profitability in the “New Normal”
In an environment of softened demand and reduced budgets, how do law firms continue to grow and increase profitability? This is the question in this afternoon’s session around the “new normal,” discussed by Jason Parkman, senior vice president of the Large Law segment, and Andrew Baker of Reed Smith LLP.
Much of the conversation centered on the changes that have taken place between corporate legal departments and outside counsel. Competition for corporate legal work has never been higher. A recent survey by Serengeti found that the average corporate legal department puts out 7 RFPs per year, each generating around 15 responses.
In addition, legal departments now face stricter budgets than ever before. The Serengeti survey said the number-one thing keeping corporate counsel up at night is the cost of outside legal services.With budgets being such an important factor, corporate legal departments have gotten a lot bolder in their demands for lower cost and higher efficiency from their outside counsel partners. Alternative fee arrangements, fixed fees, and transparent and predictable pricing top the list. Law firms also are experiencing increased pressure to demonstrate how they use technology to increase efficiency and reduce costs for their clients.Serengeti also found that 61 percent of legal departments now require that any associates working on their matters have a minimum of 3.25 years’ experience.
This brings up a point discussed at several sessions yesterday: firms have lost control of certain information that had previously remained proprietary to the firm, but is now accessible to clients.
We caught up with Jason after the session to hear his thoughts.