Ending the Holiday Tradition of Outside Counsel Rate-Increase Letters

This is the first article I've read by Susan, and it wasn't so much the fee increase that was so blatant, perhaps because I spent over a decade watching the chaos ensue in every case I ever worked on, it was astounding. Imagine...you have in-house counsel, in-house IT, outside counsel, outside litigation support, eDiscovery Vendors, Hosting Vendors, potentially auditors, opposing counsel...let's not forget their IT, and their vendors- it's a freaking Circus and everyone has a favorite vendor, everyone thinks they understand technology, and everyone wants to give their "friend" i.e. their favorite vendor the work- then you have me, the expert, who knows what technology will work, can't work, won't scale, is to small for the case, won't work for native review, vendors that can't process lotus notes, have limited capacity and yet I can't get a decision made because the partners defer to their IT or associates, the client (in-house counsel) defers to the partner, the vendors go around me, the IT staff assures them, they have the partners ear,,,, and hundreds of hours get wasted in this process- in every firm- on every case- without fail!! AND THAT'S WHERE THE MILLIONS AND MILLIONS OF DOLLARS IN EXCESS HOURS COME FROM- and there is not a single HONEST vendor, consultant, or litigation support staff member who had an honest bone in their body that would tell you otherwise. The only way to avoid this is with direct PARTNER ENGAGEMENT; where the claim hits the partners desk, and he calls in a consultant and I mean an expert, not Deloitte, not Navigant, not Huron, consultants who've been on the other side, the partner empowers them, or he works directly with the vendors and makes the selection him or herself and once they're hired then litigation support manages the technology. In 13 years this happened twice. Once at Debevoise for Tyco and once at Cadwalader for Enron. Both cases the Partners worked directly with me; involved IT when necessary, but it was clear throughout the process they were making the decision and they were evaluating the outside providers. It's a simple process, that actually makes the partner feel superbly about updating his client more frequently!

Ah yes, another article bashing outside counsel about fees. How tiresome. At least, Ms. Hackett acknowledges that clients have a role in how fees increase .



A few questions:



Why do lawyers seem to be the only profession that does this? And don't tell me that it is because we are the only overpriced service provider (See consultants) or the only ones that increase rates.



What is it to Ms. Hackett that some clients, in fact the overwhelming majority of them pay the increased rates, other than to see her name in print? If X company pays them, isn't it up to them? Or does Ms. Hackett think she knows better for everyone? Maybe she should ask why so few clients don't do something about it. Now that would be an original article. Maybe they feel that their outside lawyers's work justify their fees.



Why do people like Ms. Hackett bring up the fungible point only when fees are discussed, but not at 5pm on a Friday before a long weekend when there is a time crunch to get stuff done or one of their executives has messed something up and they need help sorting it out?



Lastly, it is not particularly brave to take this stance, hence my amusement at her self-righteousness. (Note: This is a business issue, NOT a moral issue.)



I used to find the dynamic amusing, but now I find the cycle tiresome. Writers like Ms. Hackett write these articles. Some of the in-house lawyers chime in with how right she is. Some outside law firms agree so they can get the work from in-house lawyers like Ms. Hackett used to be. (Whether they follow through with all of this is separate dynamic.) "This will now begin to change !" is the battlecry



The outside lawyers bill at the hourly rate, and most clients pay it, which starts the cycle again. Sound familiar?

Susan:

Rebel against the fruitcake! It's about time. Excellent article and guidance to clients. While all of this makes perfect sense in theory, in practice it is a full-time job for at least one person or team. So clients, take Susan's advice and hire and spend your money on a dedicated Chief Legal Officer (or consultant) whose sole job is to implement and control efficient win-win legal services for your company. The ROI will allow for days of wine and roses rather than more stale fruitcake.

Your article gave law firms more credit than they deserve. I have been general counsel for more than 20 years and I can count on one hand the number of letters I have received from law firms, even after asking for such letters, actually informing me that rates were going to be increased. My experience is that law firms raise their rates without even the courtesy of a letter or a call informing me that they intend to raise my rates.