Dive Brief:
- Costs have risen to a point where they’re considered a material concern for investment firms, more than two-thirds of lawyers in private equity and venture capital firms said in a survey.
- That could put bonuses at risk, according to half of the 300 lawyers participating.
- Pressure is increasing for them to find cost cuts, said 90% of the lawyers, surveyed by research firm Coleman Parkes for spend analytics company Apperio.
Dive Insight:
Limited partners are the main source of pressure, most of the lawyers said.
Legal costs are growing in PE and VC firms, which is what’s fueling the pressure, they said. Costs are expected to keep rising next year.
Because legal work is so unpredictable, it’s considered the top challenge for lowering costs. The lack of transparency around law-firm billing contributes to the problem, with many saying they sometimes get billed for unnecessary services.
The lack of transparency means law firm invoices can come in higher than expected, said 80% of the respondents. The bills are always higher than expected, 40% said.
Although lower fees would be a positive, it would be better to have timely, transparent and predictable invoices, two-thirds of the lawyers said.
