There are several reasons legal departments may look beyond well known, large law firms when choosing their outside counsel. Cost concerns, for example, or wanting local expertise. But according to the “Global Trends in Hiring Outside Counsel” report, many often turn to smaller firms because they believe they are more innovative than their larger counterparts.

The report, a survey of over 300 general counsel and senior in-house lawyers, was commissioned by startup Globality and conducted by The Lawyer Research Service. It found that more legal departments, 19 percent, were dissatisfied with their larger law firm counsel than they were with their smaller ones, 6 percent.

What's more, half of the respondents said they work with smaller firms because they are more innovative, while 63 percent also said they do the same because small firms provide better client services. The survey defined small firms as those with “500 or less lawyers,” said Alex Reynolds, director of legal practice at Globality.

Like larger firms, small firms may likely have introduced things like case, matter, or project management, as well as e-billing or e-discovery technology in-house, Reynolds said.

But unlike larger firms, small firms have a relatively easy time of implementing these technologies, and adjusting to the operational changes they require. “There are less levels of bureaucracy in these firms, they tend to be more agile,” Reynolds said. “So what this means is that they are able to introduce change quicker and implement this change much more effectively.”

What's more, smaller firms are more open to implementing technology and internal changes because “they tend to be less siloed than some of the larger international law firms,” he noted. “There is more of a collaborative function established in these law firms, which makes their ability to innovate much easier and makes access to ideas and the sharing of ideas a lot easier.”

So while larger firms may have more capital to purchase and implement legal technologies, smaller firms are more receptive and able to bring such changes in-house in the first place.

But finding such smaller law firms can be difficult for legal departments, who often do not know where to begin looking. Forty-four percent said they primarily rely on pre-existing relationships in their established personal network to source legal service providers, while 16 percent primarily rely on referrals from their network.

Most legal departments, 86 percent, however, expressed excitement for technologies that allowed them to source and communicate with legal providers outside their network.

Such technologies are already becoming available for corporate legal departments. Globality's core offering, for example, is using a combination of artificial intelligence and in-house experts to match multinational companies with small and midsized firms globally. In November 2017, the startup announced it had raised $25 million from a handful of investors.

But Globality is far from the only outside counsel matching service on the market.

Vendor performance assessment startup Qualmet, for instance, launched in April 2017. The company created a system to qualitatively and quantitatively evaluate law firms and other third-party services, and compare them against one another.

Meanwhile, global law firm Dentons has also entered the fold by launching “Nextlaw In-House Solutions,” a consultancy program aimed at helping legal departments select outside counsel, adopt technology and implement project management, among other things.

Other companies, such as Select Counsel, have also sprung up in the industry with the goal of connecting clients to more boutique firms across the United States.

And among calls for more data sharing among corporate legal departments, there may be more outside counsel matching services launching up in the near future. Consultancy AdvanceLaw, for example, is the midst of 18-month project, to determine how best to leverage data on outside counsel to inform spending decisions, such as whether to use preferred provider panels or charge a flat fee. The project, which began in early 2017, is being done with participation from more than 25 general counsel from companies such as MasterCard and Sony Electronics.

The growing development of technology and services may very well be in response to the demand from in-house legal departments. Which means it may only be a matter of time before many legal departments are able to more easily select outside counsel from a broader base— and before small law firms potentially see their client base expand.