11 April 2018

Costs and service quality drive trend toward boutique law firms

Multinational companies are turning to small and medium-size firms and enterprises to tackle specialised legal issues.

GCs turn to boutique firms oleksajewicz

Multinational companies are responding to high costs of big law firms by turning to small and medium-size firms and enterprises to tackle specialised legal issues, according to a report from Globality. The survey of 307 GCs and senior in-house lawyers across Europe, North America and Asia-Pacific, found that 48 percent are concerned with outside counsel costs, and only 32 per cent typically instruct firms beyond their own network. Prioritising costs and specialised skills has created a trend toward using small and medium-size enterprises.

Relationships critical

The research showed in-house teams are craving a better way to instruct firms, and they value sector breadth and expertise. However, they don’t hire firms consistent with these competencies. Almost 70 per cent of general counsel rely on pre-existing relationships or referrals to source new legal providers, rather than a rational appraisal of which firms are best for the job. Only 20 per cent of firms typically rely on methods of identifying firms that reach beyond their own network.

Better service

In-house teams say they find greater satisfaction when working with smaller firms. Levels of dissatisfaction are three times higher with larger law firms than with smaller rivals. Nearly two-thirds of legal teams hiring small firms do so because of better client service. Though GCs increasingly want to work with smaller firms, they are hampered because these firms tend to be outside their established network. Respondents with more than 200 in-house lawyers are equally willing to work with smaller firms, but primarily do so because they are considered more innovative. The research also finds a solution to the outdated RFP process is required. Almost half of GC respondents, 42 per cent, say there is an incumbent demand for a legal services e-marketplace, with communicative and “digitised RFP” technologies ranked as top technological priorities. Globality is a business to business services company. Copies of its report can be requested here

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