Some 40% of general counsel have sacked a law firm in the past year, research revealed this week.

A survey of 150 heads of legal at multinational companies, by PLC Law Department, showed that almost a third of respondents intended to dismiss more firms in the coming 12 months.


Inaccurate technical advice, poor communication and conflicts of interest were cited as the reasons most likely to lead a general counsel to dismiss a firm.


Other factors were poor commercial understanding, billing more than had been quoted, and doing unnecessary work.


Legal spend is on the rise, according to the survey, with 45% of general counsel reporting an increase in their external legal budgets over the past year. Almost a third expect the legal budget to go up next year.


Just over 15% of respondents said they envisaged a drop in the number of law firms they use next year, while almost two-thirds expected the number of firms to stay the same.


In-house departments retain close control over the selection of law firms, according to the research. The head of legal personally approves the selection of all external lawyers in more than half of the companies questioned, while business people are allowed to instruct outside lawyers directly in only 13% of companies. Non-lawyers can instruct firms from a list approved by the legal department in 21% of companies.


Only 13% of companies used procurement staff to select lawyers. However, 11% of companies that do not currently use procurement specialists to buy legal services said they planned to do so in the future.


When it comes to pitches, 'response to questions asked' was the criterion most often rated as 'extremely important' by general counsel, followed by timeliness, approach to the matter in hand, and knowledge of the business. Less than 5% of respondents regarded technology as a top priority.


Law firm marketing initiatives have limited effect on choice of adviser, the survey also found. Almost half of general counsel said marketing brochures had 'no influence' over their choice of firm. Client seminars scored the highest in terms of marketing initiatives, with 7% of respondents saying they had significant influence on firm selection, and 76% saying they had at least some influence.


Almost four-fifths of respondents said sporting or cultural events had either 'little' or 'no' influence over which firm they chose to instruct.


Daniel Desjardins, general counsel at manufacturing and services company Bombardier, said the dismissal of law firms is 'a trend that will continue'. He said: 'It comes back to the high cost of legal services. People expect a very high-quality service, and, if you are not getting it, it's a highly competitive business.


'You've got multiple choices of law firms with great people, so ultimately you go for the best value, quality and cost-wise. Long-term relationships are good, but [firms] have to show that they are doing it well.'


Nick Folland, company secretary and group legal director at media giant Emap, added: 'It doesn't surprise me [that legal budgets are up]. First there is the regulatory environment - there is no doubt more governance and regulation, but generally I think there is an environment that has increased the need for commercial diligence within corporates.


'There has also been an increase in mergers and acquisitions, which does not get budgeted for, but there has definitely been an upswing on previous years.'