10:25, July 18 183 0

2017-07-18 10:25:07
50% of clients see zero costs benefit from firms’ use of tech

Top global firms are failing to pass on the reductions from litigation services brought about by the growing use of new technology to their clients, The Lawyer has found.

In a survey of in-house lawyers, 50 per cent said they had seen zero cost savings as a result of the use of technology by their primary legal services adviser over the past 12 months.

In contrast just 2 per cent of clients surveyed said their primary legal adviser’s use of technology had helped them achieve cost savings of between 31 and 50 per cent on their most significant matters.

More encouragingly for clients, the survey did confirm that some were seeing at least a degree of cost savings thanks to firms using technology. For 7 per cent of respondents those savings were as high as 20 per cent, while for another 40 per cent (20 per cent each) the savings were between 6 and 10 per cent or up to 5 per cent.

The survey also probed into how specific the top firms are being when it comes to billing for services that often rely heavily on technology. Clients were asked whether firms generally billed for the costs of technology as a disbursement or wrapped it into the overall fee. Two thirds (67 per cent) said the costs of technology were generally wrapped into the overall fee.

But when asked which of these two options in-house lawyers would prefer, 51 per cent said they would prefer it as a disbursement.

However, only 14 per cent of respondents said they had ever requested their external legal advisers carve out the technology provision element of a disputes matter. An overwhelming majority (86 per cent) said they had never done this.

David Holme, CEO of LPO provider Exigent, said the survey findings highlighted what he described as “a huge revenue risk to law firms”.

Holme said that the lack of clarity around billing amounted to “a 100 per cent protectionist and defensive stance” by the world’s leading firms.

“I know firms that have been marking up discovery work by 30 to 50 per cent,” claimed Holme. “It’s a cash cow.”

Holme said clients should be asking their external legal services providers to break down bills into their component parts so that the portion that related to lower cost, increasingly tech-driven commoditised activities were clearer.

“The elephant in the room is pricing,” added Holme.

This year’s Global Litigation 50, produced in association with FTI Consulting, is published next week. It focuses on the use of technology in disputes by the world’s top firms. The full report also ranks the largest 50 firms in the world by the litigation and arbitration revenue they generate. It includes financial metrics such as total revenue, revenue per litigation partner and revenue per litigation lawyer as well as international headcount trends over the past five years.