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The Mad Clientist

4 Reasons Clients Are Shelling Out for Law Firms in 2017

By April 12, 2017April 16th, 2020No Comments

The $12 Billion, 10-year trend is about to reverse.

After 10 years of bringing $12 Billion worth of work in-house—top legal decision makers are applying the brakes. BTI research reveals a substantial drop in corporate counsel hiring in-house attorneys. Only 7.7% of General Counsel want to add in-house attorneys to their staffs, down from 23.0% last year.* All because client needs are changing. Right now, today, as you read this. Here is why and what it means for you:

1. More diverse needs

Corporate counsel’s needs are becoming more diverse. Top legal decision makers are preparing for a host of new legal challenges. Clients see growth in such diverse areas as tax, product liability, class action, supply chain, labor and employment, middle market M&A, cybersecurity, and more. Top legal officers know they can’t possibly staff up to cover all these areas. They would rather look to their law firms to find the right attorneys at the right time.

2. Surge in more complex work

The number of companies reporting they face bet-the-company work quadrupled over the last 3 years. This means clients need more attorneys than they have in-house. Clients know they can rely on law firms to mobilize the resources needed to assess these matters quickly, and field a large enough team of high-performing attorneys on a moment’s notice. So, this work goes to law firms.

3. Corporate legal departments are big enough

The typical corporate legal department has grown 33% over the last 5 years by attorney headcount. The departments are now at the point where they are hitting the existing infrastructure limits. Any additions to the in-house attorney ranks will require additions to permanent support staff and related infrastructure—something corporations are loath to take on.

4. Attorneys moving back to law firms

In a more subtle trend, top legal officers are finding it harder to recruit talent out of law firms. In addition, law firm demand for partners who bring experience as a corporate counsel is increasing. Top legal officers no longer have their pick of the litter in pulling partners out of law firms. Both clients and law firms see the value in partners who have walked in corporate counsel shoes—and both are competing for talent. In-house counsel can more easily accept they will access this talent through outside law firms instead of their own staff.

Clients’ overarching needs don’t change every day. But, they do change every 18 to 24 months—like clockwork. The law firms who really want the business will be in dialogue with their clients about their plans for the year, will have in-depth and pointed client feedback, will be planning for the next year with their clients, and hopefully have helped on-board clients’ attorneys over the last 3 years.

You will have used your client feedback and planning sessions to link the right partners with the right need before clients ever ask for help. The only way to make sure your firm gets the business no longer going in-house is to guide your clients on how to solve their problems—while teaching them along the way.

You may not see an opportunity like this for another 2 years. Why wait until you have to steal the business from someone else when you can anticipate needs before other law firms—who lack feedback and insights—figure out what is going on. 


*Based on in-depth BTI research conducted on a rolling basis between February 2016 and August 2016. BTI conducted more than 330 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations, as well as 200 interviews with law firm leaders.

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