We gained some fascinating insight this spring into legal trends with the publishing of the Looking Glass report. The research surveyed 122 in-house counsel and 160 law firm partners – 85% of law firms interviewed were in the £22m-plus revenue bracket.

Misalignments between buy and sell-side

Of particular interest are the top factors influencing the decisions by in-house counsel to instruct a new firm or retain an existing firm. By plotting the perceptions of in-house counsel on these factors, against those of law firms, we start to see some interesting misalignments.

Both law firm partners and in-house counsel agreed about the importance of quality of work, technical expertise, communication and responsiveness. But in other areas, law firms underestimated the importance of their offering to clients.

One respondent, a senior in-house lawyer in a top 20 global bank, commented: "Currently, traditional law firms risk heading in the direction of the dodo. The way they run their businesses isn't keeping pace with what in-house legal functions need."

Those areas most underestimated by law firms were:

• Collaboration with other firms
• Diversity
• Providing training
• Senior partner involvement
• Use of technology
• Hospitality

Would you have predicted these?

Use of technology

In-house counsel rated technology use as an important factor in instructing a new law firm, but they also indicated that law firms do not perform well in this area. Perhaps not so surprising, since the law firms surveyed in our research rated technology a bottom-three opportunity and a low strategic priority.

Our report also highlights that law firms are still struggling with differentiation: might innovative use of technology help here? As one general counsel of a FTSE 100 company commented: "Firms that did not come up with anything innovative or different did not make it on the panel".

Faced with competition, now including the Big Four accountancy firms with their investment in superior technology, strong brands and commercial approach (such that 30% of in-house respondents said that they were willing to purchase legal services from accountancy firms), the importance of technology use by law firms should not be underestimated.

The view from in-house

Our research showed that in-house counsel rate technology and innovation as a big opportunity. Yet, they often struggle to convince the business of this.

To invest in technology that can help make the legal function more efficient at a time when in-house resource is much strained, in-house teams need to make strong business cases (possibly benchmarking themselves to legal team IT budgets in other businesses) to persuade their internal stakeholders and make creative use where they can of technology resources that are already available.

Despite these challenges, in-house functions do see technology and innovation as a key opportunity, and expect their suppliers to keep up, or even lead the way, in this area.

To access the full Looking Glass 2015 report, please contact: [email protected]