Canadian Lawyer

18 J u n e 2 0 1 4 w w w . C A N A D I A N L a w y e r m a g . c o m by Danielle olofsson tECh support A sk most lawyers who have been practising for 25 years or more about the present trend of clients bringing work inhouse and they will probably respond they have seen it at least once if not twice before. They might also explain that even- tually clients, especially the larger clients with extensive legal departments, will be forced to reduce these and to send more work to external counsel again. It is sim- ply part of the cycle that characterizes the market for legal services. If this is the case, presumably all law firms have to do is sit back and wait for the market to return. Yes and no. While there is no reason to believe bloated in-house departments will fall under scrutiny and, if not obliged to reduce their teams, will not expand them, the conclusion all the work these depart- ments cannot handle will flow back to law firms is questionable. Unlike in the past, and depending upon the type of work involved, clients have a large variety of legal service providers from which to choose — be it software that manages clerical work more efficiently to various legal pro- cess outsourcing companies, at home and abroad, that claim to perform traditional tasks for lower fees. The challenge facing law firms, therefore, is how to place them- selves for when the pendulum swings back. To meet this challenge, it is important to understand why many clients choose to bring work inhouse, what work in- house teams perform, and which sectors in particular are affected by alternative legal service providers. With respect to the first matter, the most frequently cited explanation is cost. According to Richard Stock, outside counsel costs between 40 to 45 per cent more than in-house coun- sel. Likewise, he says not all legal work is performed inhouse. Litigation, labour and employment, intellectual property, tax, and other specialized matters are still sent to external law firms. Smaller clients also send out M&A and securities work. If the above is true, when in-house teams begin to shrink the type of work that will return to outside counsel will be cor- porate-commercial. But how do law firms position themselves to ensure this work comes back? If firms wish to compete with the various legal process outsourcers — and some may not, after all the boutique model can prove very lucrative provided it has the skillsets and/or prices clients seek — they may have to offer some of the services these companies do at compa- rable prices. This means continuing to use knowledge management and technology to generate efficiencies and reduce the cost of routine work. It may also mean a firm having its own LPO entities. There is another service, however, that neither law firms nor clients exploit to the fullest: secondments. This arrange- ment is a win-win solution. It provides support and assurance to clients whose When the pendulum swings back secondments have many forms and value to both clients and law firms.

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