Corporate Law report carries some unwelcome news

Corporate Law report carries some unwelcome news for large law firms

A new survey of corporate law users has produced some bad news for large law firms, including increased pressure on the fees charged to corporates for legal services and the need to keep to quoted fee estimates.

The survey, the ACLA/CLANZ Legal Department Benchmarking Report 2010, is due to be released on 24 August, also shows that none of the corporate inhouse legal teams across Australia or New Zealand, surveyed by the publishers, plan any significant increase in their use of large law firms.

The survey, conducted between the Corporate Law Association of New Zealand (CLANZ) and the Australian Corporate Lawyers Association (ACLA), covered 150 companies and government agencies in both countries and was conducted by Wellington-based Team Factors and former CLANZ president Ron Pol.

“For big law firms in particular the findings contain some unwelcome news,” said Corporate Law Association of NZ (CLANZ) chief executive Helen Mackay. The survey respondents, who together spend over $2 billion on legal costs annually, do not anticipate significant change, but nor do they anticipate significant increases in their large firm legal spend."

The report shows that over half the New Zealand corporate law departments also plan to reduce their costs with 22 per cent of them reporting significant or very significant pressure to do so.

The survey is the most extensive ever conducted in New Zealand or Australia in terms of examining corporate law expenditure and the size of the corporate legal services market. Its metrics are extensive, covering a wide variety of data and trends as well as covering the observations of general counsel and others from corporate law departments in private enterprise and both local and central governments.

Unsurprisingly, legal costs are one of the major concerns of the corporate counsel and their employers. “It’s hardly surprising that cost are amongst clients’ top concerns,” said Ron Pol. “But it’s not just the size of legal fees, the way that lawyers communicate costs and the timely reporting of unexpected overruns seems to be a big part of the issue,” he said in a statement.

Some of the largest law department in Australasia were surveyed on a range of queries, and reported that law firm fee estimates were on or below budget just 4 per cent of the time. Only about a third reported that law firms met budget more than half the time.

“The message is clear,” said Helen Mackay, “optimal outcomes and value for money are more e important than hourly rate, but over a better understanding of the needs of clients is critical.”

ENDS

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