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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 our 2003 Quality of Life survey, many of these statements are just talk. (See “The Customer’s Always Right”.) For the first time as part of our annual survey, we asked in-house lawyers detailed questions about their relationships with their outside counsel. The results from the 1,010 respondents did not even hint at watershed change. In fact, most in-house lawyers surveyed 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 percent were satisfied with their outside counsel’s attitude. Thirty percent said their companies cut the number of outside law firms their company uses. But then again, 24 percent said they are using more firms. The results in this survey contrast with comments made by newly hired general counsel in last month’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, New Jersey-based consulting firm Hildebrandt International, Inc., says that GCs may be looking to change the number of outside firms they use. But, he adds, 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,” says 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. Our findings bear that out. The survey’s most eye-popping number in the law firm section, is that 44 percent of respondents said they were pursuing alternative fee arrangements. Among that group, 43 percent said they were getting flat or fixed fees, and 16 percent got fees-by-contingency. Just 14 percent said they were getting discounts. Some companies resort to plain, old-fashioned jawboning to lower fees. Honeywell Inc. associate general counsel Elizabeth Stairs says that she recently went to a prominent New York law firm and complained loudly about the “grossly inappropriate” bill her department received. Stairs says, 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 says. 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 says, “I sense more sound and fury than what’s actually being implemented.”

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