Why Do General Counsel Fire Law Firms?

Meredith Hobbs

Corporate Counsel

06-01-2012

What does an outside firm have to do to get fired by a law department? Make a big mistake? Commit an ethical breach? Diss the CEO? Nothing that radical is required, it turns out. A conference in March hosted by the Georgia chapter of the Association of Corporate Counsel, and held at the offices of Sutherland Asbill & Brennan, revealed just how easy it can be.

Shannon Pierce, a senior counsel at natural gas distributor AGL Resources Inc., recounted an instance in which she felt a firm had overcharged her company. And this was far from a bet-the-company case. In fact, it almost couldn't have been smaller. Pierce asked a firm to use an associate instead of a $600-an-hour partner to write a memo. But when she got the bill, it was for the partner.

"It was a $25,000 memo that should have been a $5,000 memo," Pierce said. After making several other staffing requests that went unheeded by the firm, she stopped using it.

A similar story was told by Stephen Kaplan, general counsel of Orlando-based Connextions, which runs call centers for health insurance companies. Kaplan had hired a large Washington firm to handle a regulatory compliance matter. In his opinion, the firm was using partners to do work that could be done by second- or third-year associates. He asked them to give the work to asso­ciates, but they simply refused to do so.

"They said this was the way they'd always done things," Kaplan explained. Maybe for others, but not for him: "I dropped the firm."

Kaplan predicted that as the next generation of general counsel takes charge, evaluations of outside counsel will rely more and more on metrics assessing efficiency and productivity. Pierce chimed in: "We want to see them provide more value—and act as our partner to build that relationship with us."