This is the first post in a five-part series dealing with Legal Waste and outsourcing strategies to overcome it. Corporations and law firms are looking for cost-effective services because legal fees have hit the summit at a time when companies are being forced to take a closer look at the bottom line. Many corporations and law firms have begun incorporating the cost- effective strategy of Legal Process Outsourcing (LPO) in order to break the cycle of legal waste at their companies. When companies consider whether to take the leap into outsourcing, they should bear in mind the following 7 Deadly Sins of Corporate Legal (Over)Spending:
1. Gluttony: legal rates have gone up 75% during a “great” recession when most companies are cutting operating costs and employees.
2. Lust: most companies fall in love with a big law firm name and image, only to find that the associate doing their work is learning on the job.
3. Legal Envy: hourly rates, skyscraper office space, and revenue expectations have become more a function of firms’ comparing themselves to each other for bragging rights rather than reflective of value of work done for your company.
4. Greed: big firms will typically bill $200 per hour for an associate who hasn’t even yet passed the bar.
5. Extravagance: your fee pays for the lifestyles of the rich and famous partners at a big firm who will never touch your work, even once.
6. Hubris: exaggerated self confidence propelled by the big law firm name equally propels a mounting bureaucracy of billable hours in which your company and its real needs get lost.
7. Vainglory: Unjustified boasting swirls into a tornado of big law firm revenue expectations that must be fed by every client, including your company, whether or not the work truly justifies it.
These 7 Deadly Sins illustrate that the traditional lawyer business model is broken.
Next up: Why Unbundling Legal Services Works.