It’s a major challenge for many companies’ legal departments: finding a way to do more with less. Workloads have expanded as a result of stepped-up compliance and regulation demands, and shrinking budgets have meant a shortage of staff to execute required work. Fortunately there are some proven methods for increasing efficiency and decreasing costs that can make general counsel and their staff more productive while adhering to spending constraints.
This doesn’t mean pulling the plug on outside law firms entirely, but rather maintaining guidelines on when to use them versus in-house resources, judiciously and for the right job. It all takes a good deal of planning, some creativity and a bit of chutzpah.
You won’t need a chair and a whip to tame this beast, but you may want to consider the following suggestions on how to gain control of legal spending.
Take the reins
The days of law firms dictating the terms for clients and their legal departments are but a memory, and unchallenged retainers have pretty much gone the way of the manual typewriter. That is not to say there aren’t a few holdouts that refuse to budge from hourly rates, but even top-tier firms that have been around for many decades see the writing on the wall and understand the shift from a sellers’ to a buyers’ market.
Negotiating reduced fees, once considered unseemly by the most prestigious law firms, has become commonplace in recent years. “Reducing the number of outside counsel, concentrating the work with them and securing discounts have accelerated since 2008,” says John MacCarthy, executive vice president, secretary, and general counsel at Nuveen, referencing the year of the financial meltdown, when many companies accelerated belt-tightening efforts.
Legal departments are sorting through what might have become a large roster of outside firms with an eye toward decreasing the number and deepening the relationships. The idea is to right-size and ensure firms are being retained for the right reasons.
The whittling-down process has worked well for many companies’ legal departments, including ITT’s, which recently implemented a Preferred Provider Network for law firms retained. After the spinoff, Burt Fealing, GC and corporate secretary at ITT Industries, says ITT was able to consolidate to half the number of outside firms it used.
