It’s no secret that in-house legal departments have increasingly come to rely on outside counsel for some of their more complicated transactions and cases. Of course, selecting firms and attorneys to fulfill this supplementary advisory role can be daunting, particularly when a company’s future- including financial, reputation, and more- is at stake.
In a recent study published by The Global Legal Post and international law firm consortium TerraLex, “The General Counsel Excellence Report 2015” offers some insight into the relational dynamic between outside counsel and the GCs who hire them. In surveying the interplay with more than 125 corporations around the globe, the study found that fee-conscious GCs place a premium on relationships in helping them make decisions.
At the same time, GCs have assumed a heightened level of responsibility and control in post-recession corporate authority. This increased control appears to have had a direct impact on the scrutiny with which in-house counsel negotiate their fee arrangements. According to results of the report as published by Corporate Counsel, “60 percent of respondents said they regularly ask outside firms for alternative fee arrangements, a 28 percent increase from 2013. More competitive bidding processes for work also are becoming more typical. Some 22 percent of respondents now mostly use this approach, an increase from 14 percent last year.”
It comes as little surprise to many legal observers, who say the recession sounded the death knell for the traditional big law firm model with large staff and offices with heavy reliance on hourly billing. The fact is, while general counsel are more in control than before, firms are accepting and adapting to the new landscape with varying degrees of flexibility.
Despite a heightened sensitivity to fee structures, the report remarked on the high importance of counsel’s relationships with outside attorneys. According to Mary Heaney, editor-in-chief at the Global Legal Post and editorial director for the report, “General counsel value people who are giving them a bit of added value above and beyond what they expect.” In fact, half of the survey respondents said they use long-standing relationships to choose firms. “When asked what aspect of law firms’ client management practices they value most, the top-ranked answer was knowledge of the client’s business activities and sector, followed by direct contact with one law firm partner responsible for the relationship.”
The survey also touched on alternatives to outside counsel, such as legal services outsourcing. However, nearly three-quarters of respondents indicated they were not using legal services outsourcing due to fears about quality, data security, and confidentiality. Nonetheless, nearly the same percentage indicated they would be actively looking for avenues to employ outside service providers in the future.
