Additional requirements imposed before inside counsel can hire outside counsel

An article in the European Lawyer, April 2009 at 18, quotes Sandra Mulrain of Georgia-Pacific, now owned by Koch Industries. Referring to changes brought about by the bad economy, she explained a tougher attitude in legal department regarding retentions of outside counsel. “It’s no longer just a matter of need and volume. You have to have a real justification for using an outside firm.”

What is a “real justification”? That smacks of authorization being required from a more senior lawyer before you can ask a firm to do something (See my post of April 1, 2009: gating process.). Other requirements test for justification. For example, perhaps a client has to agree to bear the estimated costs of the external firm. Perhaps you have to obtain and get approval for a budget from the firm. Perhaps the firm must be a panel counsel (See my post of Feb. 14, 2009: demand management at Royal Bank of Canada.). Perhaps any spending on firms is on a very short leash (See my post of March 19, 2009: firms can’t spend much without approval.).

Gate-keeping steps such as these cool the ardor of someone who wants to hire a firm, slow down the process, and probably reduce fees paid.