A new report from UUֱ assesses the competition which the Big Four accounting firms are posing to traditional law firms. In this blog, we will explore how in-house legal teams can take advantage of the Big Four’s expansion without compromising their own workforce.
The expansion of the Big Four, as well as overall growth of alternative legal service providers (ALSPs), has come at an opportune time for in-house legal teams. Over recent years, slimmed down in-house legal budgets have forced GCs to maximise efficiencies in the way they distribute work. In particular, they need to decide which matters they should retain in-house, what to send to traditional law firms, and what can be outsourced to an ALSP.
Since the Big Four combine technology and process efficiencies to handle high-volume, low-value legal work at a much lower cost, they can be an attractive option for in-house legal teams who have large scale projects. This is particularly the case for global corporations operating in multiple jurisdictions; having their projects handled by an international ALSP can offer a greater degree of consistency compared to a law firm which relies on local partner networks.
“Most in-house teams have traditionally been used to working in a certain way—you either do the work yourself or you ask your panel firms to support you, whereas if you are in any other business function, you’re used to doing it a bit differently, you’re used to outsourcing scale stuff,” said Anup Kollanethu, UK head of legal managed services at EY. “More in-house teams are now starting to see how their peers within the business are operating and there is almost an acceptance that they have to adapt and use a different approach.”
GCs often prefer to deal with high-level matters themselves, rather than outsourcing them. Kollanethu says: “If you talk to most general counsel, they will say if they had the capacity and the expertise they would keep all the really strategic complex work for themselves because that is institutional knowledge, but often they just don’t have the capacity or the expertise because so much of their time is just dealing with the day to day and the demand for doing more with less.”
However, by outsourcing high-volume work to an ALSP, GCs can free up the time of their own in-house teams. As such, they have a greater ability to retain some of the complex work and handle this in-house, which they would have otherwise had to outsource to a panel firm.
Whereas in-house teams have traditionally had a set of long-standing law firm panels, they are increasingly adding separate ALSP panels. Depending on the nature of the work, they can decide to call on the relevant panel.
But although ALSPs have traditionally been used primarily for high volume work, they are now expanding their expertise. Commenting, Juan Crosby, a partner and NewLaw leader at PwC, said: “Initially the ALSPs were more focused on certain types of bulk activities, so a lot of legal process outsourcing work, but now the types of services that are offered have gone higher up the complexity spectrum.” He notes that, aside from the legal advisory component which PwC offers, it can also help clients transform and manage their budgets, something which is “really helping the general counsel office start to reimagine their operating model for legal.”
Another way in which in-house legal teams can take advantage of the expertise of the Big Four, is by leveraging their skills at implementing technology to improve efficiency. Crosby notes: “If you look at the biggest transformation that is happening in law and you look at the way in-house legal functions are revising their operating model, a key component of the change is around scalable technology.” In effect, GCs are indirectly helping to create and implement legal technology, often with the assistance of ALSPs.
According to Craig Chaplin, a partner at DWF, legal tech will increasingly allow large in-house legal teams to become more self-sufficient. He also expects that, as more corporate legal teams seek managed service solutions in addition to traditional legal advice, there will be increased collaboration between law firms and ALSPs such as the Big Four.
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