Legal department survey finds law firm alternatives on the rise

REUTERS/Wolfgang Rattay

(Reuters) - Corporate legal departments are increasingly using law companies, an alternative to traditional law firms that often tout lower prices and greater use of technology, according to results of a survey of legal procurement professionals released on Wednesday.

More than 80% of the 120 respondents to procurement trade group Buying Legal Council's 2021 survey said their in-house legal team now uses at least one law company, up from about 75% of respondents in 2020.

Law companies, also known as alternative legal service providers, often lease lawyers to their clients for a set time period or project. That lets law departments get extra help on litigation and investigation support or e-discovery when needed without adding permanent headcount or paying law firms expensive billable hour fees.

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Buying Legal Council found that in 2021 respondents on average manage relationships with about three law companies. That's a drop from 2020, when, on average, respondents worked with six.

The number of law firms companies used also dropped year-over-year. Respondents in 2021 instructed 144 traditional law firms compared to an average of 168 firms in 2020.

Respondents included buyers of legal services, including procurement professionals, who work with corporate law departments to help select providers. Respondents were from Fortune 500 companies and international equivalents.

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Caroline Spiezio covers legal industry news, with a focus on law firms and in-house counsel. She is based in New York. Reach her at Caroline.Spiezio@thomsonreuters.com.