Study: Companies Want Smaller Firms, But Have Trouble Finding Them

(CN) – Large companies increasingly want to work with smaller, more innovative law firms, a recent survey found, but have trouble finding them due to over-reliance on personal connections.

The study, commissioned by Globality, conducted by the Lawyer Research Service and released Thursday, surveyed 300 general counsels and senior in-house counsels at international businesses that generate more than $1 billion in annual revenue.

Along with an increasing preference for smaller firms, the survey revealed the levels of dissatisfaction rated three times higher with bigger firms—19 percent as opposed to 6 percent.

“It’s clear clients are increasingly unhappy with larger legal providers,” Joel Hyatt, CEO and co-founder of Globality, said in a statement. “They’re expensive, aren’t as innovative, and don’t provide the same level of customer service smaller firms can offer.”

Yet companies continue to hire large firms at a higher rate because of personal connections rather than objective decision-making, according to the study. About two-thirds of the respondents relied on pre-existing connections when making hiring decisions related to outside counsel, while another 16 percent used referrals.

More than half of the survey respondents said their frustrations with large firms related to costs.

On the other hand, respondents said smaller firms were more affordable and made clients feel like a larger priority.

“We get better client service from smaller firms. We have 4,000 employees and £4bn [$5.5 billion] in turnover,” said Ben Woolf, general counsel EMEA at Tate & Lyle, in a press release about the survey. “When we instruct larger firms we are probably one of their smaller customers and just another customer in the long list they already have.”

Smaller firms not only pay more attention but can also be more innovative and nimble in their approach to the cases, according to the feedback provided by the study.

The study concludes that clients are not locating smaller firms simply because they are more difficult to find.

“International companies are remaining with the larger firms through their old networks because they don’t know how to reach smaller firms that have the right expertise in the right jurisdictions,” Hyatt said. “We can see a clear appetite for new ways of sourcing law firms and artificial intelligence matching provides the answer.”

Globality is a platform dedicated to connecting clients with small and midsize firms and businesses that can meet their needs.

The survey data incorporates responses from general counsels who operate across the spectrum of industry sectors including technology, media and telecommunications, energy and infrastructure, financial services, oil and gas, real estate and insurance.

The respondents are from various countries located primarily in North America, Europe and Asia-Pacific.

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