To control costs and improve legal service, more client legal work has been brought in-house in recent years.  As clients have achieved those twin goals, the proximity of readily available legal services to business decision makers has spawned greater institutional reliance on the captive legal departments.  The increased access to legal services for company business units has imposed more demand on the in-house solution.

Meeting that demand by piling more work on the already strained company lawyers is not always possible.  Whether a lack of capacity or missing expertise, the increased demand for legal services has resulted in an increased use of outside lawyers.  This turn of events signals a bit of good news for law firms.  Indeed, in the effort to contain their legal spend clients ironically may have cracked the door open a little for outside law firms.

How should law firms react?  Based on the recent Legal Tracker LDO Index/Benchmarking and Trends Reportby the Legal Executive Institute, “pumping up the hustle” alone will not suffice.  Instead, the report indicates that the selection of outside counsel can be influenced greatly by whether the outside law firm is “proactive.”  Being “proactive” means different things to different people, but lessons learned from in-house legal departments suggest that a proactive firm is in front on such matters as:

Pricing its Services. The pricing of legal work is a sophisticated proposition that involves more than reducing rates, delivering budgets, or capping fees.  Clients are looking for cost certainty while simultaneously positioning for desired outcomes.  By proactively approaching pricing with a client, a law firm sends the message that client value matters to the firm.  If proposed by the law firm, the pricing inevitably postures it and the client towards a financial arrangement that works for both. Reactively waiting for the client to dictate terms or set the agenda on pricing shows little initiative to the client, tends to lead to the firm’s financial disappointment, and sets the firm poorly for grabbing more work.

Working Efficiently. Among the things that clients like about their in-house legal departments is the efficient delivery of legal service.  In presenting itself to land a client’s available legal work, firms should understand from the client the ways the in-house services are efficient.  With that knowledge, a firm can strategically design its services to meet or exceed that efficiency.  By having a plan for efficiency, the firm can explain to the client how it will replicate if not improve on the performance the client has come to expect and enjoy.

Achieving Results. In many instances, the important client legal work will consist of matters the client is used to managing. For that kind of legal work, the client will have an expectation of results premised on in-house attorneys’ past performance.  Understanding the client’s past experience with its in-house team is useful intelligence when seeking to be hired.  Any law firm pitching this work should demonstrate its understanding of the client’s expectations and its plan to meet or beat past performance.  Having a conversation in which the client shares its requirements serves two purposes.  It shows the client the firm will listen, and it guides the firm towards a successful strategy.

Understanding the Business.  A hallmark of many in-house legal departments is their ability to understand a business unit’s needs, expectations and objectives.  That insight typically is earned over an extended period of time in which the company lawyer’s presence in the company culture inculcates a recognition of business imperatives.  An outside firm seeking to be engaged should strive to understand the client’s business issues just as they are understood by the in-house lawyers.  Just as importantly, by engaging deeply with the client about its business needs, the firm shows its commitment to furthering business objectives through legal service.

Based ontheLegal Executive Institutereport, the opportunity for firms to gain more legal work from clients with legal departments does not reflect client unhappiness with the path chosen. Rather, client satisfaction with its in-house solution is here to stay.  As your firm pursues the newly available opportunities, is it keeping that in mind?