Corporate law departments are increasingly separating new matters into one of two buckets of legal work: routine/basic and higher value/risk. There is a clear division: black and white—no shades of gray.

“Maybe you shouldn’t say that routine work is being commoditized,” said a lawyer-friend with a frown. “Attorneys can be a bit sensitive.” But once she read the Business Dictionary’s definition of commoditization, she was convinced that although the word commoditization might seem inflammatory, it was an accurate description: “Almost total lack of meaningful differentiation… thin margins … sold on the basis of price and not brand… characterized by standardized, ever cheaper, and common technology that invites more suppliers who lower the prices even further.”

This summer, HBR Consulting interviewed eight senior members of corporate law departments across various industries. The discussions were informal and all were off-the-record. But the research, which was then tested with other industry experts, confirmed that most companies maintain two lists: law firms associated with routine matters, and those used for higher-value matters. In our conversations, one in-house head of litigation said that having two lists also helps them include smaller firms and address broader corporate goals by using more minority-owned or woman-owned firms that might not have the resources to handle large-scale matters. However, not all law firms are following this trend. When a law firm informed one large software company that it only wanted to handle intellectual property litigation, not IP transactional work, the GC pushed back, and said it was all or nothing.

During the eight interviews, several patterns emerged that support the trend toward dividing up work and driving prices down for routine/basic matters.

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Tags: Commoditization, corporate law departments, routine matters