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As news abounds of big profits for law firms and soaring salaries at the top of the market, general counsel are under increasing pressure to find new legal partners that can offer smarter and more flexible services, more cheaply. As a result, contract lawyer services — where outside lawyers and legal tech experts are hired on a case-by-case basis — are thriving.
Providers say they can carry out work for GCs at a half to a third of the cost of private firms. While cost was initially the main selling point, access to outside expertise is “an equally strong motivating factor today”, says Veta Richardson, president of the Association of Corporate Counsel.
Their growth is also an indication that “new law” services are building trust with in-house clients. “We GCs have a deep understanding of our buying needs, and it’s a smorgasbord right now,” says Janet McCarthy, chief legal officer at Santa Fe Group, a corporate advisory business.
“If you are a GC who is not thinking beyond who is on your [firm] panel and fixed-fee arrangements, you are negligent in the conduct of your job.”
Many of the names in this sector have become well known to GCs: Vario, Peerpoint, UnitedLex and Obelisk to name a few. Some were set up by private firms, including Vario (Pinsent Masons) and Peerpoint (Allen & Overy), which noted a trend towards flexible arrangements early.
Others are independent platforms, such as Axiom and Elevate, while Lawyers On Demand (LOD) was spun out of a law firm in 2012 and bought out by private equity house Bowmark Capital in May.
“We’re at a stage where potentially it’s hard for GCs to navigate,” says Simon Harper, co-founder of LOD. “But fast forward five years and it will resolve itself. The market will become clearer and GCs will get used to the complex landscape,” he says.
Since the financial crisis, in-house legal teams have grown, becoming more powerful and influential within their businesses. While this gives them greater capacity and expertise to handle new regulatory hurdles, from data protection laws to Mifid II, the increased bill from larger legal teams puts pressure on GCs to keep other costs down, says Tony Williams, founder of legal consultancy Jomati.
“In many institutions lawyers are among the highest-paid people in the business, so using [outsourcers] makes sense,” Mr Williams adds.
Contract lawyer platforms have attracted legal talent with their flexible models. The majority are senior associate level or above and many have in-house experience. “For an in-house team to get people like that gives a high degree of comfort without getting them on the payroll,” says Mr Williams.
Could it become the norm for GCs to entrust their most important work to a flexible-working collective? “If you’re dealing with sensitive litigation or a major investigation I can imagine why you would want to go to a big law firm” says Ms McCarthy. “When you go to the board there is a desire to see a brand. [But] as that trust develops, you will see GCs . . . start to extend the relationship.”
She adds: “The disrupters coming into the legal ecosystem are giving law firms a run for their money.”