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In an era of increased cost and compliance pressures, general counsel are managing their outside law firms more closely than ever, according to a new survey by the Association of Corporate Counsel, the 22,000-member in-house bar, and Serengeti Law, a legal consultant. The ACC survey tracked trends showing in-house lawyers stepping up the sophistication of their management of outside counsel: more rules, higher-level technology, bolder requests and closer budgeting. In-house lawyers have taken note of the salary increases for first-year law firm associates. They’re looking at bills with high hourly rates from their outside counsel. And they are increasingly questioning the value of the work done and whether it justifies the cost. ‘Tremendous pressure’ “There is tremendous pressure being put on in-house counsel to manage the companies’ legal spend,” said Frederick J. Krebs, president of Washington-based ACC. He has talked to in-house lawyers from around the country � particularly at the group’s recent national convention in Chicago, where the survey was released. They’re all watching rising law firm salaries and the effect on hourly rates. Krebs expressed frustration with law firms not seeming to share those concerns. “Firms’ focus appears to be on leverage, profit per partner, not on value to the client,” said Krebs. “That’s the critical component. Looking at the client and providing something the client wants at a price the client is willing to pay. A lot of firms are failing to do that because they’re focused on profit per partner.” Wal-Mart Stores Inc. sent out a memo to its outside counsel demanding a freeze on across-the-board rate increases and citing the unacceptable impact of salary raises, according to a recent article in Legal Week, a London-based affiliate of The National Law Journal. “I think there is a lot more scrutiny,” said Happy R. Perkins, vice president and general counsel for GE Energy, an Atlanta-based division of General Electric Co. that makes turbines and other equipment used to generate power. “We try to see if we can get a better result at a lower cost � which is what people are trying to do elsewhere in the General Electric Co. They call it productivity.” Increasingly, GCs everywhere seem to be applying the same kinds of cost-control measures to their outside law firms as their company counterparts do with any other vendor service. The dynamic is a reflection of the increased pressure on all executives to control costs and comply with the requirements of the Sarbanes-Oxley Act of 2002. “We manage costs more closely than corporations have in the past,” said Leah G. Cooper, vice president and general counsel of Rio Tinto Minerals of Denver. “I think we have more accountability than we used to. As an officer of this company, I have a personal liability for anything that goes awry.”

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