Outside counsel please businesses

As part of the magazine's annual "Quality of Life" survey, in-house lawyers were asked about their relationships with their outside counsel. The results from the 1,010 respondents did not hint at watershed change. In fact, most said they were happy with the law firms they use.

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For years, in-house lawyers have bragged about making fundamental changes in the way they work with outside counsel. They say they’re rewriting the rules about how a law firm gets hired; they’re extracting concessions in the fees they pay for legal services. But judging by a Corporate Counsel survey, many of these statements are just talk. As part of the magazine’s annual “Quality of Life” survey, in-house lawyers were asked about their relationships with their outside counsel. The results from the 1,010 respondents did not hint at watershed change. In fact, most said they were happy with the law firms they use. Eighty-seven percent of respondents said they were satisfied with their law firms’ work, and 85% were satisfied with their outside counsel’s attitude. Thirty percent said their companies have cut the number of outside firms they use. But 24% said they are using more. The results contrast with comments made by newly hired general counsel in November’s Corporate Counsel survey, “The Counsel You Keep: Who Represents America’s Biggest Companies.” In that report, the new GCs said they were boldly reshaping their relationships with law firms. They were firing long-standing firms and shopping around for new ones. Legal consultants say they can explain the apparent contradiction between the two sets of findings. Rees Morrison of the Somerset, N.J.-based consulting firm Hildebrandt International Inc. said that GCs may be looking to change the number of outside firms they use. But, he added, lower-level in-house lawyers may not have the power to hire or fire firms at will. Even so, the revolution isn’t likely to happen anytime soon. “I hate to burst anybody’s bubble,” said Morrison, a member of the American Bar Association’s Commission on Billable Hours, which published a study on the topic in August 2002. “But these things are definitely not changing. Eighty-nine percent of billing is straight billing,” according to the ABA study. Alternative fees The findings bear that out. The survey’s most eye-popping number in the law firm section is that 44% of respondents said they were pursuing alternative fee arrangements. Among that group, 43% said they were getting flat or fixed fees and 16% get fees by contingency. Just 14% said they were getting discounts. Some companies resort to plain, old-fashioned jawboning to lower fees. Honeywell Inc. Associate General Counsel Elizabeth Stairs said that she recently went to a prominent New York law firm and complained loudly about the “grossly inappropriate” bill her department received. Stairs said, however, that even though the firm wouldn’t reduce its bill, Honeywell kept it on as outside counsel. The only punishment was to “de-emphasize their role,” she said. In-house lawyers clearly have a long way to go before they dramatically overhaul the traditional billing model. Frederick Krebs of the Association of Corporate Counsel said, “I sense more sound and fury than what’s actually being implemented.” Corporate Counsel is a sister publication of The National Law Journal .

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