Law firms are asking for 8% rate increases
Here's why I think that's a huge mistake
In-house lawyers are in ‘peak crisis mode’ according to recent research by Axiom who surveyed 100 deputy GCs.
They are dealing with deep budget cuts + hiring freezes. With the same amount of work.
As a result, 94% (!) of the surveyed in-house counsel claimed their team lacked the staff bandwidth to do their job effectively.
As a service provider, this is where you have an opportunity to step in and help, and cement deep relationships in the process.
How you behave when your client is struggling is how you will be remembered when they’re on the up again.
However, in a collective act of self-harm that reminds me of the financial crash in 2008, law firms are deciding now is the right time to ask for rate increases of 7-8%.
I started work at a large law firm in 2008, and I remember us doing that then as well. Always struck me as odd. Your client has less money… so you ask for more money?
Anyway, back in 2008 that behaviour jumpstarted a whole new breed of legal service provider. In-house lawyers simply couldn’t afford to solve their “more for less” problem using law firms, so the interim lawyering market got a huge boost and permanently took away a bunch of market share.
This is why I think it’s such a mistake for law firms to ask for more at this time. They have had the historic benefit of deep relationships, which have made them the default option for external legal support for decades.
But every time law firms get greedy (especially at a time like this), they force their clients to reconsider that default choice. This is extra risky, if you didn’t really offer great value for money to begin with.
This will lead to another big boost to providers of other options. And these days, there are so many even more cost effective and innovative options out there.
Which leads me to my rather shameless plug (sorry!):
Lexoo is one of those options for all commercial contracts currently on your plate.
We are a team of in-house lawyers who review routine contracts for in-house legal teams at scale.
By working with Lexoo, you’ll:
have a team of really commercial lawyers at your finger tips, who will work like you work. This means you don’t have to fix it - no over-lawyering! Your internal stakeholders will literally not be able to tell the difference;
save budget compared to using law firms, interim lawyers, or even hiring.
Anyway, both rant + plug over ;-)
Thanks for being here,
Daniel
P.S. If you’re an in-house lawyer who needs help with any of these things, also let me know!
Build a playbook: if you're looking to build a contract playbook, we developed a builder tool in MS Word called LexPlay. It comes with plenty of templates so you can create one in hours, not months.
Multi-country and repapering projects: such as localising T&Cs, employment contracts, answering regulatory questionnaires as well as Data Protection remediation (SCCs etc)