Market News

Clients Want Innovative Firms. So Why Aren’t They Hiring Them?

By Victoria Hudgins for News

General counsel say they want efficient and tech-savvy legal services from their outside counsel. But when awarding work, GCs will usually pick firms that previously worked on their matters over ones that are potentially more innovative. Still, some industry observers noted as legal tech experience grows, the use of software may play a bigger factor in hiring.

“Even when law firms do a RFP [request for proposal], the incumbent firms do retain a big advantage just because they are a known entity and they were chosen [previously] for a reason,” noted Jason Winmill, managing partner of corporate law department consultancy Argopoint. “A new firm does need to bring something compelling to the table.”

A prime differentiator to win work could be technology if the firm can convincingly convey its benefits, Winmill added. “Technology can be a part of the mix and help them distinguish themselves, [but] I would also say that’s really hard to [do] in a RFP.” 

However, Winmill noted, “certain types of legal services lend themselves to technology-based efficiencies.” If a client is shopping for e-discovery services, for example, technology would be a key criterion in a RFP regardless of previous relationships. For matters that aren’t document-heavy, however, it’s still difficult for clients and their law firms to describe the need for technology and innovation.

Still, RFPs aren’t the only obstacles to clients leveraging efficient or tech-enabled firms, noted Elevate’s vice president of enterprise solutions and Get Sh*t Done Stephen Allen. Instead, Allen argued the lack of in-depth legal tech understanding renders most tech and efficiency conversations surface-level in the legal profession.

“Whilst we are seeing a number of law departments ask law firms ‘how are you going to deliver this project?’ or invite firms to consider ‘how will you use technology?’ these questions are treated as table stakes, and rarely is the technology itself or how it is used interrogated in any detail,” Allen said. “Many firms have stock answers to these questions, which satisfy the initial question and almost never is their actual deployment of technology retrospectively assessed.”

From the client perspective, HUB International chief legal and compliance officer John Albright said that while he’s noticed an accelerated adoption and maturation of legal tech in firms, it doesn’t come across in pitches. “They can all talk about legal tech, a lot of the large firms have incubators and tech arms and some firms have their own ALSP [alternative legal service provider] arm they’re pitching and I think that’s all relevant. But what I’m not seeing is fully integrated pitches that have the tech layered into the [service].”

However, surface-level responses regarding tech will only improve after clients and law firms further understand legal tech, Albright said. “It’s an education process on both sides. You need to know what questions to ask,” he noted.

Albright said he and his in-house team are studying the legal tech market and continuing to emphasize its importance when hiring firms—a trend Minority Corporate Counsel Association founder Lloyd Johnson Jr. believes will spread.

“More general counsel and law departments are scrutinizing very closely what law firms do around technology because if there is a deficiency in what the law firm is doing, it could impact the general counsel and the company he or she works for,” Johnson added.

While in-house attorneys will continue to have discretion in their outside counsel hiring, general counsel will emphasis the importance of innovation to ensure it doesn’t become an afterthought, Johnson said.

“They have one of their direct reports make it a priority. Just given the depth and breadth of the GC, although this is important it’s not something they’re going to handle personally and secondly because it’s so complex other than asking some very general questions, general counsel are making this a priority for one of their direct reports. That’s a definite trend.”