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Legal Practice Management

Insights in Action: How can law firms address their clients’ top strategic priorities for 2024?

Tom Burgess  Senior Associate and Insight Analyst / Thomson Reuters’ Client Services

· 6 minute read

Tom Burgess  Senior Associate and Insight Analyst / Thomson Reuters’ Client Services

· 6 minute read

In today’s legal environment, it’s more important than ever for outside law firms to understand the strategic goals of their corporate client and position themselves to service those goals

Given today’s speed of information on the open market and advancing technology, law firms must make it a priority to consider their own business models and integrate their priorities with those of their clients in order to stay relevant and top-of-mind.

Following sustained expectations of growth in corporate legal spend since the pandemic, key in-house legal decision-makers are becoming more cost-conscious. For law firms, that means the commercial value of the advice they can offer — from both a business and sector perspective — is becoming a more important part of their own value proposition and can play a key role in helping law firms avoid rate erosion or discounting.

Indeed, it is critical for law firms to understand the strategic weight that in-house legal professionals are giving to certain concepts, many of which are often reactions to shifts in social, economic, and geo-political behavior.

How have strategic priorities changed among clients?

While many key priorities of corporate general counsel have remained the same, there have been a few critical shifts of which law firms must be aware if they want to effectively deliver what is of value to their clients. While factors such as controlling costs, finding efficiencies, and protecting the overall company from risk remains the fundamental concerns of in-house legal professionals, there have been some shifts in some strategic priorities. And one of the biggest shifts in strategic priorities among in-house legal professionals since 2019 is that many corporate clients are looking to simplify their internal legal processes.

While clients still place some importances on the day-to-day advice being offered by their outside counsel, for example, law firm leaders should know that this perceived importance has waned since the pandemic. And for outside lawyers, this makes it all the more difficult to maintain strong points of contact and engage in discussions about company strategy.

Indeed, as corporate general counsel become more proactive and less reactive in their approach, reducing their organizational need to outsource legal work, such as regulatory compliance, to law firms, law firms need to adapt to this reality and understand GCs efforts to limit the financial burden of the legal department on the wider organization. Therefore, to remain top of mind, an outside law firm must look for ways to serve these needs and ensure that client engagements are conducted from the perspective of a strategic business partner, not just as an outside legal advisor.

What can law firms learn from C-Suite executives’ perspective?

Another way law firms can more deeply understand the legal needs of their corporate clients — and especially find ways to offer the most valued advice — is by understanding how C-Suite executives see the role of their internal legal function. In some areas, business leaders’ expectations are largely in line with the priorities of their in-house legal professionals, particularly when it comes to driving efficiencies within operations through the adoption of new technology.

However, there are notable differences in business executives’ perspective, and how legal departments describe their own reality, as shown in the Thomson Reuters Institute’s recent 2024 State of the Corporate Law Department report. In-house legal professionals emphasize their role in safeguarding the business, through overall risk management and understanding the impact of regulations to the organization. Yet, C-Suite-level executives think that those in legal departments should be focusing their attention on the effectiveness of the overall business in both serving its customers and retaining top talent.

While many key priorities of corporate general counsel have remained the same, there have been a few critical shifts of which law firms must be aware if they want to effectively deliver what is of value to their clients.

So, what are outside law firm supposed to take away from this misalignment in expectations? It is far from surprising and is largely influenced by those internal biases which are influenced by the responsibilities individuals hold. If law firms want to help GCs and legal department heads be seen as strategic partners to top leadership, it is vital for outside lawyers to have as holistic a vision of the company’s overall business as do internal leaders.

This way, law firms can best determine their course of strategy, whether they should be leaning into efficiencies or technological innovations in their own legal delivery that could benefit the client, or helping the client develop new businesses or markets or expand existing ones.

For law firms, this strategy could raise their own profile among client leaders even as it helps provide clients’ legal departments with greater influence within their own C-Suite.

Positioning the relationship and differentiating from the crowd

To this end, law firms should position themselves to support the ambitions of their most important decision-makers within their top legal clients, especially those who oversee the law firm hiring process.

Indeed, successful execution of this strategy is where a law firm can both differentiate itself from the crowd offering fundamental expertise and instead begin making an impact in areas in which their clients are laser focused: proactively managing risk and ensuring cost control through efficient application of legal advice while bringing strategic direction into the legal department’s operating environment. Most importantly, law firms will need to consider how they can demonstrate the breadth and quality of their services in a competitive legal market focused on clients’ needs.

As clients have put less focus on the day-to-day advice they receive from outside law firms, diminishing what was once considered a prominent part of the value of the legal services provided, law firms have to adapt. Today, a heightened focus on cost control and risk mitigation are concepts which are much closer to home for the in-house legal department and its overall business — and law firm’s service offerings should reflect that.

In today’s legal market, value is becoming increasingly conceptual. Law firms must spend the time to position themselves as an internal stakeholder and bring solutions to issues with which they weren’t once involved. Indeed, this might feel like a step away from the historical path of the legal profession, but for those law firms that are dynamic and able to stay light on their feet amid times of change, today’s environment may be a place to shine.

For deeper insights around how law firms can address their clients’ top strategic priorities in 2024 and beyond, click here.

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