New research issued today by Grant Thornton's Forensic and Investigation Services practice has revealed the high expectations inhouse counsel have of their external dispute resolution lawyers aside from the outcome of their disputes. It has also revealed what it is that they really want from a client servicing perspective and how they judge their legal providers.

As expenditure on external dispute resolution has continued to sky rocket, management have sought to bring spiralling business costs under control. It is no surprise that managing costs was the most important factor cited by in-house counsel. However, inhouse counsel also want their law firms to understand their businesses' strategic objectives, recommend options, predict outcomes and manage their expectations – all of which supported by regular and clear communication.

Toni Pincott, a partner in Grant Thornton's Forensic & Investigation Services practice, says “While this may appear to be an exhaustive list of criteria that law firms need to fulfil, inhouse counsel have high expectations which they believe should be met by their legal providers. It is essential that law firms understand they are being judged on more than just the outcome of the cases they work on or the size of their bills. It is also imperative that firms understand how they are performing in the eyes of their clients and that there is disparity between how they think they are performing and how well they are really doing.” she continues.

What inhouse counsel want
The research highlighted that in-house counsel believe managing costs is the most important factor (outside of the result of a case) when assessing a law firm's performance. The inhouse counsel surveyed gave law firms a score of 55% when it came to managing their costs, whereas when asked to grade their own performance, lawyers gave themselves a score of 71%. “The majority of firms understand how important cost is to inhouse counsel and have begun to address this in recent years. However providing a service which delivers strong value for money is not a new concept and this disparity in results highlights the fact that firms are clearly not meeting inhouse counsel's wider needs and expectations. It also suggests that they don't understand how important the parameter of cost really is in terms of what the whole package needs to look like,” says Pincott.

“As the traditional litigation market continues to shrink, and inhouse legal teams continue to grow, law firms will have to compete more and more for their share of the work. Our research suggest that this will result in a situation whereby inhouse counsel will naturally gravitate towards firms that meet their needs and provide added value. In the future, those firms that manage to control their costs, and in the process satisfy their inhouse legal clients, will be the ones most likely to survive in the shrinking disputes resolution environment.”

Commerciality
The second most important factor to inhouse counsel was law firms' ability to demonstrate they understood the strategic objectives of the business and that they acted in a commercial manner; in effect demonstrating that they want to get closer to their inhouse clients, which in turn will allow in-house counsel to get closer to the business managers.  Inhouse counsel gave law firms a score of 79% for their strategic and commercial performance, and law firms thought they attained a mark of 81%.  

“This time, the results were very close, showing that law firms have made significant in-roads to address the issue of acting commercially, however, they still have some way to go to achieving that elusive score of 100%,” says Pincott. “Going forward, the challenge will be for external dispute resolution lawyers to see the bigger picture – not just knowing the clients business, but also understanding the politics, sensitivities and the business landscape in which they operate.”

Alternative disputes resolution and early resolution
Over the past few years, there has been a huge cultural shift in the UK, and law firms claim that they do their best to persuade their clients from going to court. However inhouse lawyers have a very different view of the situation, giving them a performance score of 70% when it came to suggesting the use of alternative dispute resolution. In terms of ranking their own performance, law firms thought they deserved a score of 89% – the biggest disparity the research highlighted.

A similar pattern emerged when focusing on early resolution, inhouse counsel gave law firms a score of 69% and law firms gave themselves a performance score of 86%.

“Inhouse counsel are suspicious that law firms are not financially motivated to recommend alternative dispute resolution, yet lawyers quote high percentages of early resolution cases they have worked on,” continues Pincott. “At the end of the day law firms and inhouse counsel are always going to be a little bit 'chalk and cheese' however they need to learn to embrace their differences, and how to work together now and in the future. The 'Holy Grail' team would be one that includes a seamless team of in-house lawyers, the business itself and external lawyers.”

• The next issue of Insider Corporate Legal – Legal Technology Insider's regular supplement for inhouse legal departments and corporate counsel – will be published later this week.