Points of Law: Unbundling Corporate Legal Services to Unlock Value

The traditionally close relationship between corporate legal departments and big law firms is being disrupted--in part because the former are concerned about costs and lack of accountability. But executives now have many more choices about how to get their legal work done: They can use technology to do document search, bring in high-end temporary lawyers to manage major projects, or send routine processing work overseas. It's tempting for legal departments to react to these new options by asking, "How can we acquire the same services at a lower cost?" But aiming for relatively small, short-term savings could critically damage important relationships, the authors write. Instead, corporations should seize this chance to do four important things: assign legal work to the providers best suited to a particular task; lower legal costs without sacrificing quality; achieve greater transparency and accountability; and derive greater value from in-house counsel. The recent downturn has resulted in excess capacity at many law firms and heightened scrutiny of the billable-hours model. Technology has both created a problem--by generating oceans of data that must be collected, preserved, and reviewed in litigation--and offered solutions, in the form of "smart searching." And over the past few years, new types of legal-services providers have emerged. These three factors have led many companies to renegotiate terms with their law firms. They should beware, say the authors, of focusing on discounted rates rather than aligning incentives between client and counsel. And if legal services are unbundled, firms should be alert to the opportunity to reintegrate them for valued clients.

• Outsourcing
• Litigation and lawsuits
• Business law and ethics