In-house fox guarding the firm henhouse – unrealistic to expect invoices to be slashed

Talk about the fox guarding the henhouse! How can a general counsel realistically expect the lawyer who is ostensibly managing the staffing and services provided by law firm to review the invoices of that firm and materially reduce them? If that lawyer has been on top of the matter and has been truly managing the services of outside counsel, is it realistic to expect that person to criticize his own work? I think they might take the Fifth Amendment.

Not to mention they have little incentive to save other people money when their own career may ride on the efforts of the law firm (See my post of April 27, 2008: forget alternative billing on huge matters; and June 26, 2008: key to cost control are the decisions of in-house lawyers.).

Compounding all of this, clients may ignore or reject cost-control efforts. In the context of large acquisitions, The Bus. Lawyer, Vol, 64, Feb. 2009 at 313, puts this irony well. “A corporate officer (especially of the buyer) who curbs the lawyers could be blamed if a major defect is overlooked. Further, if the client is a public company, the lawyers’ fees are borne by the public shareholders. The self-interest of the officer, then, is to instruct the lawyers to spare no expense.” If the inside counsel share that self-interest, and outside counsel welcome the cornucopia from their cost-is-no-object attitudes, kiss the budget good-bye.

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