Law firm management and appraisal systems

This article comprises our checklist to help you select and manage external law firms. We also include exercises based on typical in-house needs and provide pointers to help you appraise your advisors and give feedback

Working with external law firms across multiple business units and jurisdictions can get complex.

For this reason, it’s a good idea to have a system in place to evaluate, manage and appraise your providers. 

Managing and appraising your external law firms

If you work for a large organisation, you’ll probably find yourself working with external law firms. How many will depend on the scale, type and geographical spread of your organisation’s activity. It’s reasonable to assume that the larger the organisation is, the more law firms you’ll need to work with.

To help you select, manage and appraise your external support, we’ve put together a law firm management and appraisal checklist, together with two exercises to help you focus your thoughts on this important subject.

Why have a checklist?

A checklist for choosing and managing external law firms helps you understand the end-to-end process, from mapping your legal support needs to appraising the quality of advice and service you receive. It’ll give you a clear understanding of what to consider at every step of the process and illustrate ways to test your thinking and decision-making.

Our checklist covers the seven key stages of the in-house lawyer/external law firm relationship:

  • Establishing your legal services needs by collecting historic and predictive data;
  • Mapping those needs against the law firm’s support model requirements;
  • Identifying potential providers;
  • Sourcing, including evaluating the pros and cons of requests for proposals (RFPs), panels and exclusivity and identifying potential conflicts;
  • Managing instructions, quotes, invoices, e-billing and matter management;
  • Day-to-day relationship management – who interacts with who and why? and
  • Appraisal and giving feedback to your law firms.

Establishing your legal services needs

To assess what you need from an external law firm, start by:

  • Deciding which sources of data give you the best historic and predictive information. Consider using data collation tools;
  • Checking the accuracy and predictive value of the data;
  • Considering the organisation’s future strategic plans and assessing their legal consequences; and
  • Setting out the framework for budgetary control.

Mapping your needs

Next, consider these needs in terms of:

  • Volume of spend;
  • Geography of spend;
  • Actual legal content in work versus process work or simple fact checking (i.e. is legal skill and cost actually needed);
  • Advice versus activity;
  • Urgency;
  • Risk;
  • Synergies;
  • Budget sources; and
  • The 5 Cs:
    • Cost;
    • Competence;
    • Capacity;
    • Certification; and
    • Complexity.

Identifying potential providers

The next stage is to use your map to inform your choice of law firm. For each option ask yourself:

  • Are you, as a client, big enough to matter or too small a spender with the law firm to be a priority?
  • Are there administration synergies that may mean that it makes sense to cluster work with one firm even if, on cost or competence grounds, that firm might not otherwise be the first choice?
  • Would it be better to insource?
  • Does the firm offer multinational platform advantages, such as one bill for multiple projects?
  • Is the firm technologically compatible with your organisation when it comes to things like e-billing, Sharepoint and e-matter management?
  • Does the firm add genuine strength in depth to your overall capabilities?
  • If you need to provide assurance to the Board, banks or other stakeholders does the firm's brand carry enough "reputational weight"?
  • Can you assure yourself you’ll get what you pay for?
  • Is it worth considering other options, such as going directly to the Bar, to a locum firm or to an LPO provider?

Example 1: Selecting a law firm

You have:

  • £2m per annum advertising law spend split evenly over 20 countries;
  • £0.5m per annum employment, of which £0.3m is in two countries and the rest over another ten;
  • £1m of spend on rolling out a new service in three countries; and
  • £0.5m for M&A work in London.

How would you select a law firm to help you with this work – and why?


Other questions to consider at this stage include:

  • Are your legal needs large enough, specific enough and geographically focussed enough to justify putting out to tender?
  • Does the potential return justify the resource needed to prepare an RFP?
  • Have you considered the pros and cons of establishing a formal panel?
  • Would you follow the partner working with your organisation if they move to another law firm?
  • Should you single source or multi source?
  • What role should your organisation’s procurement team play in the process?
  • Would it be valuable to use test pieces?
  • Would mono sourcing or disaggregation work best for your needs?

Managing instructions

Once you’re ready to go ahead with a law firm, decide next:

  • Which department within your company will pay the bills;
  • Who in your organisation will issue and oversee the instructions;
  • How you’ll approve quotes, commission the work, measure quality and sign off on invoices – or reject them;
  • What fee structure you wish to work with and whether it should include success fees, capped, fixed fees, service credits for poor or late performance etc;
  • How you’ll manage scope creep and change control; and
  • How you’ll manage admin and maintain good relationships with non-legal stakeholders in your business (e.g. finance, accounts payable, procurement).

Day-to-day relationship management

There are two sides to maintaining an excellent working relationship with your law firms. For your part:

  • Stay engaged with the people working on your projects;
  • Build your knowledge about both business strategy and your organisation’s industry sector;
  • Keep your firms proactively briefed about what your company is doing and your legal work plans so that their work is not occurring in a vacuum and they feel more part of the team;
  • Don't be too aggressive in your demands for value-adds and donated time (it will come back to you in any event in higher bills);
  • Understand the implications of team and business change on both sides;
  • Make sure that the administration, bill approval and paying and project management and feedback processes and people involved are efficient, effective, human and valued on both sides - these are the most thankless tasks for both parties so it really pays to make the people doing them feel valued and respected;
  • Take the trouble to understand the impact of requests.

Meanwhile, consider if your law firm is:

  • Looking short or long term in its relationship with you;
  • Driven by chargeable hours and utilisation – especially at their year-end. If it is, you may be able to drive a bargain on non-time critical work;
  • Has a realistic understanding of your volume, type and timing of work - unrealistic expectations are easy to create but rarely benefit anyone in the longer term;
  • Charging you to learn about you.

Assess too, where you rank in their priorities and why.


When planning appraisals with your law firms, bear in mind that asking them to participate could cost you money. For this reason, discuss only things you know you can deal with and analyse their work closely beforehand.

Methods for providing feedback could include:

  • Informal or formal discussions;
  • Structured or semi-structured written communications;
  • Numerical scoring; and
  • Evaluations of behaviour as well as functional performance.

Involve your General Counsel and relevant teams, including non-lawyers, from both organisations and encourage an honest, open, two-way dialogue.

A good appraisal system allows for a planned approach to the frequency of feedback and a process that enables both parties to evolve through engagement, testing and ongoing commitment to improvement.

Example 2: Assessing fee structures and planning the relationship

You need:

  • A new company and new country start up pack (advice and incorporation);
  • A compliance review of 1,000 sales contracts in one country;
  • Product safety law reviews in 10 countries;
  • Three-months of pan-European legal support for advertising a newly launched product; and
  • Ongoing proactive monitoring of a piece of EU law.

What basis would you want this worked quoted on? Who in your organisation would manage the relationship? And how and when would you provide feedback to the law firm? 


Selecting and managing external law firms are large parts of an in-house lawyer’s role. You’ll be involved in – if not responsible for – assessing your organisation’s legal needs, devising a selection process and managing and appraising the law firms you instruct. It’s a complex process, yet you’ll make it easier by following a checklist and breaking it down into more manageable tasks.