A new report says firms’ in-house legal teams are frustrated with the quality they receive from external law firms as legal fees are increasing.
According to the intelligent contracting platform Juro, two-fifths (40 per cent) of in-house lawyers believe the top 100 law firms offer ‘poor’ value for money.
While four per cent quoted the firms as ‘terrible’ value for money. One respondent was noted saying “high hourly rates for inexperienced staff.”
The platform Juro spoke to 160 senior lawyers across the 20 countries, including the UK, for its ‘State of In-house’ report.
This comes as most in-house legal teams don’t expect to grow this year, as 69 per cent reported their teams are either staying flat or will shrink.
As a result, a lot of legal work is pushed out to external law firms, at a time when legal costs are increasing.
When asked for their biggest complaints, overpriced services topped the list, followed by poor-quality advice that lacks commercial relevance and the “outdated” hourly billing model.
The billable hour system was highlighted in a recent Eyes on the Law column, noting the rise of AI and the cost of lawyers going through the roof; law firms are rushing to change how they bill clients.
Juro’s report quoted an unnamed general counsel saying, “For startups and small companies who want basic legal advice or documentation, the price is astronomical, and the service is sub-par as the company will never be a key client.”
Another in-house lawyer told the report: “The cost inflation in recent years means that it is increasingly difficult to justify spend on outside counsel for anything other than mission critical pieces of advice.”
AI is shaping up to be an alternative to external law firms as nearly 20 per cent of respondents said they have used AI in the last 12 months to replace outside counsel, while 34 per cent intend to do this in the next six months.
Juro CEO and co-founder Richard Mabey said: “In an environment where AI is redefining value in the legal industry, AI-driven solutions and alternative providers are proving that high-quality legal work doesn’t have to come with excessive fees or inefficiencies.”
“As budgets remain tight and workloads grow, in-house teams are making smarter choices and rejecting the old model that no longer serves them,” he added.