5 best practices for hiring new outside legal counsel

The following are five best practises for recruiting fresh outside legal counsel.
When it comes to hiring fresh outside legal counsel, do you go with the same suppliers as your peers? We understand – you have a lot on your plate and rely on your buddies. However, you are not alone if you are concerned that your outside legal expenditure is substantially greater than you would want.

In 2021, small businesses spent an average of $5.9 million on outside legal advice, according to BTI, and the majority of general counsel chose the first law firm recommended to them by peers — “even if this company is only suggested once.”

It’s time to cease relying on word of mouth when hiring fresh outside legal counsel. Just because a vendor is a fantastic fit for a friend’s business does not guarantee they will produce the same ROI for yours.

Using these 5 suggestions, you may get the most out of your outside legal spend by doing a more impartial assessment.

Investigate vendor service offers and personnel.

Outside counsel is a major expenditure. Consider it like purchasing a new automobile. If you don’t do your homework first, you might easily waste thousands of dollars on a car that lacks the features you require. Similarly, just because a vendor has a certain practise area (PA) does not imply that it is one of their top practise areas. So, before selecting providers, conduct your research to locate those that make the most sense for your business.

Reviewing vendor websites is the simplest approach to gain an overview of the depth and breadth of PAs and the people behind them. Look for providers that have handled comparable legal situations to the one you require. This information may be found by going through PA pages, attorney and paralegal profiles, and client testimonials. Check to see whether any of the practise areas are rated by Chambers.

Scanning a vendor’s website will also give you an idea if they may be employed for work on many legal concerns, which could result in a bulk discount and a closer working relationship on your end. The more a vendor learns about your company, the more specialised recommendations they can deliver.

The final aspect to consider in your initial analysis is personnel diversity. While there has been a drive for more diversity and inclusion in the legal profession for ethical reasons, diversity also provides major commercial advantages. Numerous studies suggest that a diverse range of experiences and viewpoints improves job quality, creativity, and profitability.

While you may browse profiles to see whether a vendor’s roster is homogeneous, you can also ask them to disclose their American Bar Association Model Diversity Survey findings, if they are accessible, for real statistics on persons from underrepresented backgrounds. Also, check if you can uncover any information on their organization’s D&I work – look for people that “walk the walk.”

Compare pricing to your typical vendor rates.

Instead of making informed estimates about a potential vendor’s pricing, compare their expenses to the typical rates of your present vendors. Legal departments at small businesses are seeking to save roughly 14 percent by 2024, and this data-driven strategy can help you avoid overpaying vendors.

This comparison may be made in spreadsheets, but using a legal cost management software requires far less human labour and time.

This sort of legal software consolidates all of your expenditure data into an one dashboard, providing you a clear picture of how much you’re spending and on which suppliers. This can help you remain on track as you seek to reduce your out-of-pocket spending.

A legal management software makes determining the average cost of your vendors simple. (From SimpleLegal)

With the press of a button, you can simply dive down into detailed vendor analytics such as cost by vendor, practise area, or timekeeper.

When evaluating prospective vendors, you should also inquire whether they are open to alternate price structures (AFAs). These billing structures, as opposed to hourly rates, provide more certainty to your legal expenditure because you know the full cost up front. These arrangements also assist you prevent bill padding, which occurs when attorneys round up their time or charge for non-billable labour, resulting in a larger bill for you.

Think about other legal service providers.

If you simply go with the first law company that is recommended to you, you may lose out on the significant benefits of dealing with an alternate legal service provider (ALSP). These vendors are becoming more popular, as they provide many of the same services as traditional legal firms but at a reduced cost.

According to the 2021 EY Law Survey, the use of ALSPs increased by 13% between 2019 and 2021. This is partly due to ALSPs’ use of new technologies to do faster, more efficient work without sacrificing quality. For example, although one in every four ALSPs employs some sort of artificial intelligence, just 7% of legal firms do so.

This usage of technology immediately leads to cost savings for you. ALSP Percipient, for example, whose motto is “legal services enabled by technology,” saved a customer roughly $400,000 simply by taking over document review and compliance.

ALSPs are a particularly sensible alternative for low-level, high-volume labour like document review, legal research, and contract administration, thanks to automation and AI on their side. Taking this task off your business legal department’s plate frees up time for them to focus on strategic issues like expenditure optimization. You’ll also lessen the danger of expensive disengagement and burnout, which is especially important for overburdened teams that lack access to legal management tools.

Determine the vendor’s data security and privacy protection.

Making certain that vendors have adequate cybersecurity protections in place is an essential risk management technique. In 2021, the average cost of a data breach will reach a new high of $4.24 million, and law firms are prime targets for hackers. According to the American Bar Association, one in every four survey respondents worked with a legal firm that had a data breach.

Avoid the consequences of a third-party data leak by inquiring about how possible providers safeguard data. If you call an attorney who does not know, seek to speak with their IT department to inquire:

  • Has your company had a data breach?
  • If so, when? And what was the underlying cause? What efforts were done to avoid a repeat?
  • What cybersecurity tools and methods does your company employ to safeguard data?
  • Do you have a policy in place for data retention?
  • Do you have a policy in place to deal with cybersecurity incidents?
  • Have you purchased cybersecurity insurance?
  • Having this talk early on can save you thousands of dollars in the long run.

“5 ways corporate legal departments may prioritise data protection” explains how to avoid costly data leaks.

Get to know prospects as individuals, not just as professionals.

The connection between outside legal counsel and your in-house attorneys is critical to the success or failure of an issue. The compatibility of external attorneys with in-house counsel is as vital as their legal advice, therefore assess their soft skills throughout the interview process. The last thing you want is to invest in a new vendor only to discover that your legal team finds it difficult to cooperate with them.

The capacity to connect on a human level with coworkers promotes strong, good professional connections. “There’s something fascinating about feeling that my outside counsel is’seeing’ me as a human and not simply a billable case,” says Meyling Ly Ortiz, Labor & Employment managing counsel for Toyota Motor North America.

These three characteristics serve as the foundation for these types of deep partnerships:

  • Communication. Working with inattentive or confused outside counsel, especially in the middle of a high-stakes litigation, is one of the most stressful experiences. Inquire directly about interpersonal communication approaches and usual turnaround times, keeping in mind that excellent communication may boost performance by 3.5 times.
  • Collaboration. As author John Murphy points out, cooperation provides businesses with a “competitive edge” through increased invention and problem-solving. When people work successfully together, everyone wins.
  • Kindness. Working with pleasant individuals contributes significantly to work satisfaction and employee well-being. When your in-house workforce is content with their coworkers, they are less likely to leave.
  • Maintain excellent connections with outside legal counsel and vendor management software.
  • When utilising a manual approach, it is tough to objectively establish how well your suppliers are performing for their business and provide them with relevant feedback. According to CLOC’s 2021 State of the Industry Report, just 27% of in-house legal departments formally monitor vendor performance.

Vendor software may readily track crucial vendor parameters such as matter lifecycle durations and billing compliance. You may use this data to calculate your ROI and have constructive, data-driven dialogues about vendor accomplishments and areas for development. Check out our free demo to learn how our vendor management software can assist you in making the most of these important connections.

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