Clients are demanding alternative fee arrangements from their law firms – freelancers can help

Dramatic changes in the relationships between law firms and their clients offer the “perfect storm” of opportunity for legal freelancers.

The Wall Street Journal has cited Pfizer, Cisco, and American Express as just a few companies intent on reducing the amount of legal fees it pays to its outside law firms. “’Billable Hour’ Under Attack,” August 24, 2009, Nathan Koppel and Ashby Jones.

Rio Tinto, a leading international mining group, is reportedly bypassing its external counsel and working directly with a legal outsourcing company to outsource some of its legal work, saving $1M in legal fees by paying lower rates than its main external counsel Linklaters and Baker & McKenzie. “Outsourcing is taking hold,” Financial Post, August 26, 2009.

In order to stay competitive and keep their clients, U.S. law firms are being forced to reevaluate their staffing arrangements, and onshore outsourcing should be the first place they look. U.S. legal freelancers can provide the same quality work product that the client expects (and often an even higher quality product), at a much lower cost than a salaried associate. Reducing overhead costs without sacrificing service quality will allow a reduction in billable hourly rates to the client, without reducing profits to law firms.

May I say "I told you so?" The following is a quote from this NAFLP blog - ”Quality vs. Quantity – the billable hour mousetrap,” published January 28, 2009.

Corporate clients – the “surging demand for high-end legal services” is you, accepting the definition of “high-end” as being on the AmLaw 100 list. The “unrelenting annual rate hikes” is the price you are paying for accepting this criteria and rate hikes will keep increasing at these firms until you, the client, say "no." You are choosing “pedigree” and "prestige" over “quality” in legal services and have only yourself to blame for the outrageous legal bills on your desk.

Apparently a number of corporate clients came to the same realization. U.S. legal freelancers can provide the same quality work product that the client expects (and often an even higher quality product), at a much lower cost than a salaried associate. Reducing overhead costs without sacrificing service quality will allow a reduction in billable hourly rates to the client, without reducing profits to law firms. The legal industry is long overdue for changes.

Freelancers, go out there and make change work for you!