Frustration with high legal fees and demand for local regulatory knowledge may give small and medium-sized law firms an edge with larger clients, according to a survey reported by The American Lawyer. The survey, released by the Economist Intelligence Unit and business-to-business marketplace Globality, found that multinational companies are seeing benefits in working with small and medium-sized firms because they can offer the same quality of legal advice at more reasonable prices.
According to the report, smaller firms can be more cost-effective because they have lower overheads, allowing them to charge more moderate rates. As a result, they are able to provide the same legal expertise at a lower cost. They can also often provide regional or specialized expertise because they focus on providing services in a specialized community or area of the law. That can be appealing for multinational organizations that may have legal issues in different international jurisdictions [as quoted by Globality].
“Companies often highlight that they like the personalized experience and top-level attention from senior lawyers that smaller providers can bring to them, which is something that larger law firms need to determine how to emulate,” notes Stefan Zorn, Vice President of Customer Success at Globality.
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The announcement of the $2,000 per hour lawyer and the first-year associate starting salaries rising to $180,000 has stirred up a largely negative reaction from Biglaw clients, Above the Law reported. After the first-year salary news release, Bank of America’s global general counsel made their opinions very clear in an email that’s become public, “we are aware of no market-driven basis for such an increase and do not expect to bear the costs of the firms’ decisions” (Above the Law). According to BTI Consulting Group, the $2,000/hour billable rate structure reflects a shocking 25% increase from 2014’s highest rates, as reported in The American Lawyer.
According to Above the Law, the increase of compensation and rates at large law firms will likely open a door for “value” firms, making them more attractive to legal departments at corporations. The technology and tools available today make it possible for smaller firms to have access to the resources that Biglaw can provide to its corporate clients. Social media outlets and digital publishing software play a large role in making it easier for smaller firms or lawyers to make themselves more reputable to a larger audience. The release of these two pieces of news has created an optimal time for small and medium firms to take advantage of impressing corporate counsel (Above the Law).
For more information, contact Bill Sugarman.