Benchmarking External Counsel

“When we did our beauty contest with law firms, we noted a lot of competitors who had a general, theoretical, or legal knowledge. But, in addition to the above, our team had hands-on experience. We felt in good hands - it feels like we’re talking among peers and real business partners.”
Start-up Tech Company

Fig 3. Technical Expertise: % of clients mentioning this as a distinguishing strength
Clients answered open-ended question in online survey and gave top-of-mind, unprompted responses, which are grouped into the broader themes shown on the axis.

A deeper dive into the data reveals stark differences between the key distinguishing factors purchasers of legal services seek, with significant outliers in certain practice areas.

Clients also explained to Chambers what key factors distinguished their existing outside counsel relationships.

Qualitative responses were grouped into core themes and analyzed according to how often they appeared.

As expected, while softer skills and interpersonal qualities were prized by legal purchasers, they placed a much higher premium on a practice group and attorney’s track record and substantive expertise.

Technical excellence remains the foundation of trust and credibility, especially in high-stakes or specialized matters.

A large proportion of clients also prominently cited a law firm’s commercial awareness as key driver of their selection, married to a strong track record. Clients increasingly demand firms play the role of business advisor and solution provider, offering far more strategic and action-led advice which aligns with commercial goals.

As American corporations began to more fully grapple with the opportunities and pitfalls associated with AI, they often told Chambers they would turn to practice groups with a proven track record in this relatively nascent area.

Similarly, perhaps anticipating protectionist policy headwinds to global dealmaking, clients overly indexed on technical expertise and track record when calling upon regulatory lawyers in the international trade arena. Traditionally heavily regulated and technical areas also figured highly.

Conversely, clients were typically less interested in technical expertise in transactional practice areas and broader commercial litigation, which is usually the preserve of more generalist defense attorneys.

Fig 4. Technical Expertise: % of clients mentioning this as a distinguishing strength

Clients answered open-ended question in online survey and gave their top-of-mind, unpromoted responses, which are grouped into the broader themes shown on the axis.

Practices where technical expertise is a stronger differentiator

Practices where technical expertise is less of a differentiator

This was reversed for clients highlighting commercial awareness as a key factor, as those seeking transactional practices indicated that they were focused on issues beyond the black letter of the law.

Understandably, clients seeking counsel in highly regulated areas favored the opposite, with less of an emphasis on commerciality in their external law firms.

Practices where commerciality is less of a differentiator

Practices where commerciality is a stronger differentiator

I felt that not only their expertise, but also their style, fit well with what we were looking for. They were very approachable, responsive, and technically good in understanding our own unique governance issues."

Fortune 500 Pharmaceuticals Company

Fig 5. Commerciality: % of clients mentioning this as a distinguishing strength

Clients answered open-ended question in online survey and gave their top-of-mind, unpromoted responses, which are grouped into the broader themes shown on the axis.

Areas for Improvement

Some law firms in this area are too rigid and conservative, failing to understand market practice and unable to find commercially practical solutions, while other firms are too aggressive and fail to understand or advise on the risks of proposed approaches."

Fortune 50 Financial Institution

In-house clients were also asked on changes they would like to see in their external counsel to enhance their value and the ‘stickiness’ of the relationship.

While many companies were broadly happy with their choice of external counsel, client responses often coalesced around overall cost, expertise and ability, and bench strength.

Once again, there were wide differences based upon
practice area.

Cost

Expertise

Clients of Corporate/M&A, Private Equity, and Antitrust groups were more than twice as likely than the average client to cite high overall costs and fee rates as an area for improvement for their external counsel.

M&A transactions traditionally require deep staffing across practice areas to push through deals. Our data suggests that the cost of these transactions is starting to bite.

Similarly, a more vigorous and interventionist outlook at the Federal Trade Commission and the Antitrust Division of the Department of Justice has resulted in more delays and more intensive review of potential mergers, racking up significant legal costs.

Our data suggests cost discipline, leaner teams, and the potential use of AFAs differentiate practice groups with the highest level of client satisfaction.

Clients of Export Control and Sanctions practice groups were three times as likely to cite a lack of technical expertise as a criticism of their external providers, suggesting that some law firms have not kept pace with political and regulatory developments following onerous restrictions placed upon international trade in recent years.

Meanwhile, clients who spoke to Chambers about their use of Artificial Intelligence and Life Sciences practice groups were also twice as likely to cite a lack of expertise as a criticism of their external counsel. Both areas are complex and fast-evolving, posing extraordinary risk of falling afoul of consumers and regulatory agencies. Our data suggests law firms lack sufficient depth in these niches.

This suggests that hiring former regulators, investing in specialized training, and building cross-functional teams can be key differentiators. Highlighting bench strength, regulatory relationships, and practical insight will be crucial in pitches and RFPs.

Corporate work is extremely overpriced. There’s no actual high-level guidance, too many associates, billing is ‘attention to’, not specific. The firm does not always ask permission before starting work."

US Manufacturing Company

International trade compliance matters require considerable experience. In our opinion, knowledge of the legislation alone is not sufficient for the functional implementation of these policies."

Asian Industrial Conglomerate

Bench Strength

Clients of Capital Markets, Artificial Intelligence, and Private Equity practice groups were significantly more likely to cite a lack of bench depth as a criticism of their external law firms.

In emerging areas, such as Artificial Intelligence, some firms appear to be struggling to keep up with the demand for resources and expertise to match the myriad of commercial and regulatory concerns facing clients seeking to embrace new technologies.

Feedback on Capital Market and Private Equity groups, which have both seen high volumes of lateral hiring in law firms over recent years, suggests that law firms which invest in building deep benches, with depth across all levels, can differentiate themselves.

Firms investing in talent development, succession planning, and client communication, proactively showcasing their depth, should be a key priority.

Their sole focus is AI. The team is practical, pragmatic, and deeply entrenched in this space. Other firms are still learning and spending too much time researching."

Artificial Intelligence Start-Up

Key Takeaways

Lawyers as Business Advisors
Clients seeking external counsel cite a law firm’s technical skill and track record as a key differentiator but ascribe almost equal weight to its ability to advise beyond the legal realm, offering proactive, business-focused counsel.

Focusing on Specifics
Law firms should adapt their outreach and solicitation based on a client’s immediate needs. Those facing significant regulatory scrutiny are more interested in technicality, while dealmakers prize market awareness.

Constant Improvement
Clients cite expertise, cost, and bench depth as key criticisms of their external counsel. Mitigating these risks should be a priority, particularly in an era of looser institutional relationships and in a buyer’s market for services.