In-house lawyers view legal fees like insured employees view medical costs – third party coverage

Do rank-and-file lawyers in corporations have much enthusiasm for cutting the cost of outside counsel?

I doubt it. I doubt it because they want the best lawyers they can find to help them succeed in their careers and lighten their work and worry loads (See my post of June 30, 2007: lack of individual incentives for cost control.). Sometimes, to be sure, clients who bear the costs of counsel fees charged them exert much pressure on the lawyers managing those dollars. More times a general counsel pounds the shoe on the table about profligacy. I still suspect that psychology undermines external cost-control efforts – willing spirit, weak flesh. In my article of about a year ago, I suggested several ways to give individual lawyers reason to try to reduce outside counsel costs. Download Rees Morrison Ways to Get Inside Lawyers to Care about Cost Saving

Line lawyers want the best law firms other people’s money can buy. They do not want to waste their time on “fly-specking” bills and then confronting the partner they trust, like, and rely on with “nickel and dime” bill reductions. In public they may applaud fiscal discipline, but at their desk they want “no stone left unturned” and no associate idle on their matters.

An analogy might be employees who have medical insurance. What incentives push them to skimp on spending for their own treatment and comfort? A remote third-party pays, so, “Hey, I’m insured, I want the best and for the best doctors to do every test and pull out all the stops to take care of me.” Furthermore, lawyers believe they are in a tournament, competing for success with colleagues, and if another few dollars spent on a law firm helps me win promotion, obviously I will spend the company’s money.

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