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The economic downturn is pushing corporate legal departments to a new level of frugality, particularly when it comes to the cost of outside counsel, according to a group of in-house lawyers who spoke at the Leadership Institute for Women of Color Attorneys in Law & Business last week at the Atlanta Ritz-Carlton.

"We are undergoing an aggressive reduction of outside counsel costs," said Sandra Mulrain, division counsel for Georgia-Pacific. "When we get letters from law firms saying how much they are going to increase their fees in 2009, everybody breaks out in laughter, because that is not happening."

She said Georgia-Pacific's legal department is negotiating alternative fees and budgets before engaging outside firms. "It's no longer just a matter of need and volume. You have to have a real justification for using an outside firm," she said. "Two years ago, that was not an issue."

Mulrain spoke as part of a Thursday morning panel discussion entitled, "The role of the corporate attorney: Going in-house and finding your niche in the corporate world." The moderator was Horace G. Dawson III, vice president and division general counsel for Darden Restaurants of Orlando. The other panelists were: Jocelyn Janine Hunter, vice president for legal -- employment and labor law at The Home Depot; Noni Ellison-Southall, senior counsel for Turner Broadcasting System Inc.; and Timothy G. Johnson, general attorney-labor and employment for AT&T Mobility. The panel was part of a three-day annual event held in Atlanta for the fourth year.

In addition to the effects of the economic crisis on their departments, the panelists talked about how to prepare for, land and succeed in corporate legal jobs and how those jobs differ from working in a law firm. Dawson posed questions for the panelists to answer.

"These are times of unprecedented turmoil in all areas of the world economy," Dawson said in his opening. "As in-house counsel have risen in stature, we have also seen an increased emphasis on accountability and an increased emphasis on ethics." He framed the discussion in terms of quantity and quality of in-house work.

Dawson noted that surveys last year showed a drop in outside counsel spending and an increase in spending for in-house lawyers. But, he said, "I expect this year, both will drop."

All the panelists indicated their companies are tightening expenses

"Like law firms, we are going through layoffs," said Johnson of AT&T. "Law departments are taking on more work."

Mulrain said Georgia-Pacific laid off six lawyers in December.

Ellison-Southall said TBS has not cut its legal staff. But, she said, "we will not add people, and we will have to do more with less."

Hunter did not mention Home Depot's recent corporate wide layoffs, but she talked about economic concerns in broader terms. "Legal departments are expense lines. Business is contracting in the country. So, as business contracts, you have to contract," she said. "As cuts come, and you are just an expense line, you have to find ways to add value to your company."

One of the questions the panel addressed was the myth that in-house jobs are less demanding and time consuming than law firm work. While some of the women said they found corporate life to be more compatible with raising a family, the consensus was that it depends on the company and the job.

"In private practice, the in-house jobs are considered more lifestyle friendly and 9-to-5," said Johnson. "That is absolutely the opposite of the truth. The in-house environment is very fast-paced."

He noted some differences. One is a heightened level of expectation. Knowledge of the law is presumed. On-the-spot answers are expected. "The opportunity that you have in a law firm to say, 'Let me research that and write you a memo' is not there," he said.

Another option that ends when an attorney leaves the firm and goes in-house is the ability to "just say no" to a legal question. "You have to give an alternative," said Johnson. "Your client really expects you to be a partner."

And because in-house lawyers are really partners in the business, they are much more invested in and affected by the fortunes of the company, according to Johnson. "When you are outside, you move away from losses very quickly," he said. "When you're in-house, they stay with you."

The business nature of in-house work poses challenges for lawyers coming from firms. "How do you become a business partner when you have no business background?" asked Mulrain, who noted that those who had a background in economics or finance might have an advantage, but those subjects are not covered in a typical legal education. "It's a level of lawyering that we are not taught," she said. "The lawyers who are the most successful are the ones who do that best."

She noted that both general counsel and successful law firm senior partners have an intimate knowledge of their clients' business decisions. "You have to get that through years of experience," she said.

Corporate legal departments don't have the resources to train young attorneys the way law firms do, and those who succeed have to find their own way to learn, according to Mulrain. "Let's not be fooled into thinking that in-house departments are training grounds. They are not," Mulrain said. "But in a way it was the best thing that ever happened to me. I had to learn how to teach myself, and I've never stopped. There's nothing you can throw at me that I can't figure out."

The group also talked about networking and mentoring -- part of the purpose of the event. "I think it's very, very, very helpful to have a mentor," Hunter said. "Seek them in all facets of your life."

Ellison-Southall said she had kept in touch with some mentors and professional friends and had benefited from it -- including contact with a former professor at Howard University who was the father of Dawson, the moderator. But she had not stayed in touch with all of them, to her regret: "I guess I should have kept in touch with my law school professor Barack Obama."

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