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As one more indication that law firms are becoming more “corporate” in the way they conduct business, a growing number of firms are appointing in-house general counsel to sentinel their operations. A recent survey conducted by the law firm consultancy Altman Weil showed that 69% of the nation’s top 200 law firms have designated general counsel. The latest figures indicated an increase from 63% of firms reporting designated general counsel in 2004. The results released in the “Flash Survey on Law Firm General Counsel” reveal that law firms are directing more time and money to stanch liability risks. Those increased efforts, say experts, are a reflection of the compliance mechanisms that the law firms’ own corporate clients have initiated. “There’s a lot of know-how that law firms could adapt from the corporate world,” said Richard Goshorn, general counsel for Akin Gump Strauss Hauer & Feld. “You don’t need to reinvent the wheel,” he said. Akin Gump hired Goshorn in October. He previously worked as an in-house counsel in the international telecommunications field for 20 years before joining the firm as its first general counsel hired from outside the firm. According to the recent survey, however, most general counsel are partners within their firms who are appointed to handle the work. The survey showed that 92% of general counsel are also partners. Altman Weil solicited 197 law firms among the top 200 firms in terms of revenue, as calculated by The American Lawyer, a sister publication to the NLJ, and received 77 responses, for a 39% response rate. Pay scale rising, too As more firms are designating attorneys to serve as general counsel, compensation for those attorneys is rising as well, the survey found. Total cash compensation for general counsel in 2005 averaged $493,292, compared with $386,875 in 2004. Minimum compensation for general counsel dropped slightly, down to $250,000 from $275,000 in 2004. But maximum compensation climbed to $1.3 million, up from $735,000 in 2004. The average number of hours devoted to general counsel tasks dipped somewhat this year to 753 hours, down from 775 in 2004. However, the maximum number of hours law firms reported devoting to general counsel work increased to 2,000, up from 1,600 in 2004. Law firms have taken a cue to increase their general counsel teams from their corporate clients, which have boosted their compliance efforts in the post-Sarbanes-Oxley era, said Jon Lindsey, managing partner in the New York office of Major, Hagen & Africa, a law firm recruiter. Lindsey added that many firms are realizing that the job requires more than the part-time attention of one or two partners. “It’s the realization that you can’t fill your own teeth,” Lindsey said. “It’s better to get somebody whose full-time job it is to worry about cavities.” The type of work that general counsel are handling is changing as well. The survey found that attorneys are devoting more time to general liability issues, firm management matters, employment issues and law firm disputes. By contrast, they are spending less time working on equipment-supplier contracts, professional responsibility issues, professional liability issues, in-house ethics issues and employment of outside counsel. The study also found that 26% of general counsel oversee administrative departments, including the firm’s conflicts-of-interest function. Larger firms often delegate the assortment of tasks falling under the general counsel heading to several attorneys. Dorsey & Whitney, for example, has a general counsel who handles employment matters and legal disputes, another attorney who deals with ethical issues, and a third lawyer who works on loss prevention. “It’s the same thing our clients go through,” said Robert Dwyer, partner-in-charge of Dorsey & Whitney’s New York office. The number of law firms appointing an attorney to work full time as general counsel jumped to 32%, the survey found, up from 26% in 2004. Those attorneys working part time on general counsel matters spent 36% of their total hours on such matters. Some 64% of general counsel report to their firm’s chairperson or managing partner, and only 26% serve on their firms’ management committees, down from 40% in 2004. Nonbillable hours Law firms reluctant to appoint attorneys to perform general counsel work usually are those worried about the nonbillable hours, which the attorney spends on firm business, Lindsey said. He explained that managers hesitate to allow attorneys working part time on general counsel matters to count them toward their billable hours out of concern that attorneys performing other firm management also will want to count their hours as billable. But hiring general counsel outside the partner track can eliminate that problem, Lindsey said. “There’s something to be said for professional management,” he said. Devoting more resources to general counsel matters comes at a time when legal malpractice suits are increasing. An American Bar Association study expected to be released later this month shows that the number of large malpractice lawsuits-suits claiming $2 million or more in damages-has jumped more than 50% by some estimations. The study, which provides an “anecdotal snapshot” of legal malpractice claims, according to an ABA spokesman, was compiled with data provided by law firm insurers. It compared information from two four-year periods, 1996 to 1999 and 2000 to 2003.

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