Some of Europe’s most senior general counsel have warned law firms to expect a lasting shake up in how they’re retained and paid. Convening for a breakfast roundtable at London’s College of Law yesterday, legal heads from major corporations including Royal Dutch Shell PLC, Nokia Corporation and British Airways PLC emphasized their intention to drive further changes in billing methods, as the balance of power between clients and their attorneys continues to shift.

“Like many other companies, we face a lot of pressure with costs. We realize that they are too high and that they have to come down,” said Beat Hess, legal director and group executive committee member at Royal Dutch Shell. “I’ve been saying that for years, but it’s felt like I’ve been preaching at a graveyard: There are plenty of people down there, but nobody’s listening. Law firms have had Christmas every day for decades now, but the party is over.”

Despite operating with an in-house team that numbers 1,000 staff and 800 lawyers, 50 percent of Shell’s legal budget has been going to external counsel. To trim this expenditure, the oil and gas giant recently completed a review that cut its list of outside firms from 60 to just eight — a move that Hess said helped the company “to bring our costs down significantly in a very short time.”

Louise Pentland, senior vice president and chief legal officer at Finnish communications company Nokia, faced an even more daunting task: to slash a list of more than 500 law firms in 130 countries by half.

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