Altman Weil, Inc. today released its 2013 Chief Legal Officer Survey.  I summarize here key findings and offer some comments.

Money is Moving Away from Law Firms.  Law department budgets for internal work stayed almost the same from 2012 to 2013, about 44%.  But in that same time, the allocation to law firms dropped from 52.0% to 49.6%.  The difference is accounted for by “non-firm vendors”, whose share grew from 3.9% to 6.0%.  This means alternative providers are gaining share of wallet at the expense of law firms – their share jumped by 50%.  (See page 19 of the report.)

Service Delivery and Price Remain  Stumbling Blocks.  Almost 80% of GC negotiate law firm “price reductions” with firms.  But only 10% of GCs want the lowest price possible; most prefer “transparent” (37%), “guaranteed” (34%), or “value-based” (20%) pricing.  A separate question found that GCs still rate firms poorly on changing service delivery, rating firms 3 on a scale of 10.  In my view, these two results represents a continuing disconnect between clients and firms.  Firms that improve service delivery and master either alternative fee arrangements or can provide clear project plans and stick reasonably well to them may be able to gain share.  (See page 14 and 29 of the report.)

GC Efforts to Improve Efficiency Have Mixed Results.  Altman Weil asked two related question: and “In the last 12 months, have you done any of the following to increase your law department’s efficiency in its delivery of legal services? (Check ALL that apply”) and “Of the efforts you’ve made to improve efficiency in the last 12 months, which one yielded the greatest improvement? (Select ONE).”  The chart below compares answers.  I hesitate to draw a conclusion or even call the differences “gaps:”  It is natural that a GC would try several initiatives but only one can yield the “greatest” improvement.  I do draw one weak conclusion:  initiatives that require lawyers to change what they do are less likely to succeed.  I suspect that some of the technology initiatives are run by staff.  And deploying more paralegals does not typically change what lawyers do (or if it does, it is a change lawyers like).  Project management, in contrast, requires lawyers to change.   (See pages 6 and 8 of the report.)

Altman Weil CLO Survey 2013 - Chart 1 - Efficiency