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A recent study has found that corporate legal departments are increasingly turning to outside counsel to help them manage growing litigation caseloads and navigate new federal rules pertaining to electronic discovery and litigation management. A growth in caseloads and more time-intensive early-stage litigation work are key factors driving corporate legal departments to increase their reliance on outside counsel. A recent Robert Half Legal survey of 150 attorneys from 150 of the largest corporations in the United States and Canada found that nearly half (45 percent) of corporate attorneys polled said their legal departments have done more business with outside law firms in the past 12 months, while only 12 percent said usage levels have decreased. Thirty-nine percent reported no change. Asked what types of projects outside counsel were likely to be assigned, 66 percent of corporate lawyers polled cited litigation support, which includes activities such as witness interviews, document review, case preparation, and, increasingly, e-discovery. E-discovery is a particularly critical part of litigation support today because new Federal Rules of Civil Procedure have increased the complexity and time associated with litigation on the front end. In fact, the new rules have significantly changed the way companies manage litigation. Uncertainty about how these new rules will be applied in practice has led many corporate lawyers to seek guidance from outside counsel earlier and more frequently in the litigation process. Other areas in which companies are relying on outside firms, according to the survey, include compliance and regulatory matters (16 percent), patent issues (13 percent), electronic discovery (9 percent), and mergers and acquisitions (3 percent). Another increasingly common reason for turning to outside counsel, as well as to contract attorneys, is the need for legal professionals with knowledge of other languages, particularly for those who can work on patent and intellectual property issues involving Asian countries. For a large, international firm based in New York, Robert Half Legal recently provided 22 Mandarin-speaking attorneys and paralegals on a project basis to translate documents into English and analyze data in a telecommunications case for the law firm’s foreign corporate client. Recruiting difficulties also figure prominently into legal departments’ greater reliance on outside counsel. Many corporations are expanding their in-house teams or would like to. According to the survey, 30 percent of attorneys polled said they expected the number of lawyers employed with their corporate legal department to increase in the next 12 months. However, the shortage of highly skilled, experienced candidates in specific practice areas may be hindering them from meeting their hiring goals. The attorneys said their needs were highest in litigation (30 percent), ethics and corporate governance (22 percent), intellectual property (18 percent), real estate (11 percent), bankruptcy (8 percent), and general corporate/commercial law (1 percent). COST CONCERNS Although the use of outside counsel is a common solution for in-house legal departments looking to expand their resources, acquire additional expertise, and better manage caseloads, corporations are keeping a close eye on their budgets for outside legal support. Law firms face growing pressure to control costs while maintaining service levels. The focus on cost control has spurred many large corporations with sizable workloads to negotiate flat fees with their outside law firms. Another tactic some legal departments are using to trim the cost of outside support is requesting that associate attorneys with lower billable rates be used with greater frequency. In addition to hiring outside counsel, corporate legal departments often bring in contract attorneys on a project basis as a means of quickly assessing what they need to do to handle complex discovery requests, document reviews, and other legal matters that have the potential to overtax in-house staff. Contract professionals can work independently or supplement internal project teams. Seeking to keep corporate clients satisfied with billing rates and service, a growing number of law firms also are relying more heavily on contract attorneys in performing much of the initial litigation-related legwork, such as interviewing witnesses, preparing cases, and doing e-discovery, especially on large-scale cases. Bringing contract attorneys in during the early phases of a case helps to offset the effects of the new procedural rules that require lawyers to perform more time-intensive work relating to e-discovery and document review in the initial stages of litigation. These professionals are often assigned to work on an internal team within a law firm that is dedicated to serving a particular corporate client. In another Robert Half Legal survey, in which we asked lawyers their primary reason for hiring contract attorneys, 57 percent said it was for assistance with large projects that require more resources than currently exist. Eighteen percent pointed to cases requiring a specific type of expertise, and 13 percent pointed to reducing costs associated with casework, trial preparation, and other matters. In addition, because they work on a fixed-rate basis and are used only when needed, contract professionals enable law offices to turn a portion of human resources costs — the largest part of a legal organization’s budget — into a variable expense that can be tied to client budgets and changing needs. This flexibility is especially important when lengthy cases are involved. The use of contract lawyers also helps firms avoid overburdening staff lawyers who may already be juggling multiple cases or clients. With the growth of litigation caseloads and ever-more-complex regulatory and compliance requirements, outside support can play a pivotal role in helping busy legal departments and companies meet their business needs. Corporate clients are becoming increasingly insistent, however, that their outside law firms be like-minded about budgeting, billing methods, and work flow management. Under pressure from clients and competitors, law firms will need to remain highly responsive to changing conditions and committed to finding creative ways to deliver cost-effective, high-quality service, even as they are asked to provide support for a growing volume of casework.
James W. Patton is a regional vice president for legal affairs for Robert Half Legal, the legal staffing division of Robert Half International, in Washington, D.C.

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