Law Firms: Beware of Shrinking Client Budgets

A sharp focus on managing the cost of outside legal services is a top priority for the majority of chief legal officers at firms as large as $2-$10 billion in revenue, according to Altman Weil survey results reported by The Recorder on Law.com.

Half of the survey respondents have fired or are considering firing some of their outside counsel, according to the survey, up significantly from only one-third of respondents last year.

Hiring more in-house attorneys over the next 12-18 months is a commonly identified way that survey respondents intend to rein in the cost of outside counsel. With billable hourly rates at some top AmLaw 100 law firms now exceeding the $1,000 per hour barrier for in-demand attorneys, corporate America is looking for ways to break legal work down into categories that can be aligned with pricing and value.

This cost cutting initiative reflects the economic distress felt by consumers and businesses alike as gas prices climb, housing values plummet, food costs rise and the Fed contends with managing turbulent financial markets.

Rather than ignoring these market-driven stop signs, law firms should look proactively at how they can partner with corporate clients to help manage costs and expectations.

Yes, reducing billable hourly rates or offering alternative billing arrangements can be painful in the short run for law firms. But losing an entire account because you are either out of touch with the client from an account management perspective or slow to react to the realities of today's market is even worse.

Take a close look at your accounts now. Check back here tomorrow, to find out how you can determine which of your law firm accounts are at risk.

(Click here for full article on Law.com.)