InView Magazine: Issue 7 out now!
In-house legal teams are rewriting the outside counsel playbook, and not a moment too soon. For years, managing outside counsel meant tracking billable hours and chasing budget discipline. But today’s legal departments are shifting their approach, moving beyond cost control to build partnerships that deliver strategic value. This evolution is being driven by smarter metrics, new pricing models, and the recognition that legal services should center around alignment with business outcomes, rather than simply on time spent.
Once viewed as cost enforcers, legal departments are stepping into a new role: that of strategic business partners. And that includes the way that they manage their law firms.
Leading teams are rethinking panel selection and firm relationships, not as a procurement exercise, but as an opportunity to align legal services with business priorities and the value received. That shift reframes outside counsel not as vendors, but as partners whose performance, innovation, value delivery, and alignment with company goals are just as important as their rates.
As the 2025 Report on the State of the U.S. Legal Market from Thomson Reuters notes, the billable hour model is under more pressure than ever. Clients are demanding greater control over staffing, timelines, scope of work, and pricing. Law firms are responding (some eagerly, others reluctantly), but the message is clear: business as usual is no longer good enough.
Real change in firm management should be driven by more than gut feelings and legacy relationships. It requires data.
When legal departments use metrics like cost per matter, turnaround time, and satisfaction scores, they create clarity for both in-house teams and outside counsel. This clarity then enables genuine conversations about performance, expectations, and areas for improvement.
One legal team we advised implemented firm scorecards across a dozen practice areas. Within months, they saw higher engagement from their panel firms, more transparent communication, and measurable improvement in outcomes. The simple act of defining what “good” looked like changed the way that the work got done.
Central to the shifting approach to outside counsel management is a change in the way that legal work is priced. Value-Based Pricing (VBP) isn’t just another alternative fee arrangement; it’s a different way of thinking. Instead of paying for time, legal departments pay for deliverables and results.
When done right, VBP creates alignment between law firms and in-house teams. Both sides are incentivized to define scope, focus on clear outcomes, and deliver work efficiently. And when law firms are rewarded for what they accomplish, not how long it takes, everyone benefits.
We’ve found that legal departments that adopt VBP routinely report savings of 20 percent to 50 percent on outside counsel spend, along with better budget predictability and the elimination of invoice review and accruals. In a world where AI can streamline research, contracts, and discovery, it no longer makes sense to pay by the hour.
Behind every successful shift to strategic firm management, there’s a legal operations team pulling the levers. Legal ops professionals are developing frameworks that bring discipline and foresight to panel management, encompassing everything from matter intake and RFP design to billing guidelines and performance evaluations.
They’re also helping law firms succeed under these new expectations. This might involve collaborative scope definition, onboarding to performance metrics, or utilizing GenAI to track firm responsiveness and pricing consistency.
As the legal department evolves, legal operations is helping to reshape firm relationships, making them not only more efficient, but also more transparent, equitable, and outcome-driven.
Strategic partnerships thrive on feedback. Whether it’s through scorecards, post-matter debriefs, or regular business reviews, the best legal departments treat firm management as a cycle, not a one-time setup.
They also recognize that change takes time. Moving from cost control to strategic partnership requires internal buy-in, pilot programs, and a willingness to experiment. However, the results are worth it: stronger relationships, improved outcomes, and legal services that provide true value to the legal department and the corporation.
The legal departments thriving in 2025 aren’t just negotiating lower rates. They’re redesigning the way that legal services are delivered, measured, and valued. They’re replacing legacy billing models with pricing that rewards results. And they’re turning outside counsel into real business partners.
It’s not about tearing up the playbook – it’s about rewriting it, together.
