More on ratios of matters handled by outside counsel

According to a speaker at a recent conference from the law department of Office Depot, that department opened 7,489 matters in 2010 of which outside counsel assisted with a mere 2.4 percent! That ratio of inside to outside matters seems very low (See my post of May 24, 2011: 30% at The Williams Companies.). Slip-and-fall litigation in the multitude of Office Depot stores would on its own seem likely to drive that percentage much higher.

Maybe its internal lawyers open matters at the drop of a hat, perhaps because they are evaluated partly on how many matters they handle. More likely, I think, the number of matters handled by outside counsel is lower than one would expect, for several reasons.

One is that Office Depot’s law department might open multi-case matters, such as all slip and falls west of the Mississippi. Maybe it has assigned large groups of similar matters to one or more law firms and therefore does not open individual matters for them. Perhaps some other function at Office Depot supervises multitudes of small matters such as nuisance suites through Risk Management, small claims through the insurance group or single plaintiff discrimination suits through HR. Or perhaps an insurance company that covers the company with an EPLI policy does the chore. Maybe a matter need not be opened if outside counsel handles it below a modest sum or an aggregate spend by type of case (slip and falls in May).

I don’t know why the ratio of all matters to outside counsel matters is so low at Office Depot yet so relatively high at Williams. But I do know that if you alter the numerator (total matters opened) or the denominator (matters assigned to outside counsel) or both, the ratio will swing. If anything, since matter management systems focus on tracking outside counsel fees, I would expect a fairly high ratio of matters opened to have outside counsel involvement.

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