Published on:

Fourteen reasons, ranked by legitimacy, why a law departments doesn’t bring the hammer down on its law firms

As I came up with this list, it seemed useful to put them in declining order of legitimacy. In other words, the first few make sense, toward the end they make poor excuses.

  1. The lawyers like the services they get from the firms and feel the value delivered for the cost paid is acceptable.
  2. No one is pressuring them sufficiently from within the corporation to chop costs.
  3. They adhere to the belief that quality and outcomes matter more than cost.
  4. Within the recent past they took strong or progressive cost-cutting steps and feel no need now to revisit them.
  5. They feel they have instituted reasonable controls on fees and further efforts are either not worth the effort or, worse, will prove counter-productive.
  6. They doubt that the chimera of reductions dangled by proponents of various methods will be realized.
  7. Institutional familiarity of the firm with the client developed over the years counts for more than nickel-shaving.
  8. Much of the department’s spend goes to specialized partners who don’t face many unconflicted competitors.
  9. They haven’t heard of some successful techniques to tamp down outside counsel costs.
  10. They charge back nearly all their outside counsel costs to business units or staff functions, who have not complained.
  11. Top executives or board members favor certain firms and block the law department from taking measures.
  12. The legal spend they command is not large enough to wield much influence over law firms.
  13. Key law firms have steadily resisted efforts to reduce their costs of services.
  14. Foot-dragging and passive-aggressive behavior have stymied efforts in the department to reduce outside counsel costs.
Posted in:
Published on:

4 responses to “Fourteen reasons, ranked by legitimacy, why a law departments doesn’t bring the hammer down on its law firms”

  1. Great list to provide perspective to a person who tries to influence corporate customers to be more stringent on a daily basis. I think that number 2 should be 1, it is amazing to see the difference it makes when an initiative is driven from the top down.

  2. John Conlon says:

    Wow! Very brave of you as one who consults with corporate legal departments to list all of these reasons as I do not believe I have ever seen them listed in the open before before. To this list, I would only add two things. One is the fact that many of the corporate in-house attorneys come from the very firms they are supposed to be “regulating” or come from big firms with the same billing models. Thus, they truly do not know any better. Also,I have found that the very idea that legal bills could be reduced somehow is perceived as a challenge to an in-house counsel’s ability as a lawyer. It is as if someone is say, “you have not been doing a good job as a lawyer.”

  3. John Bentley says:

    Excellent list. Somehow, #2, #3 and #7 do not seem to be as significant of obstacles when applied to inside counsel. Perhaps one reason for this is the availability and importance placed on internal performance metrics, and the relative lack of data available (or willingness to use what is available) for measuring outside counsel.

  4. Eric Welter says:

    Great post and comments! I would suggest that another item needs to be added to the list, except that it is not likely to be an explanation actually offered because it would require honest self-examination. That is: that the hiring counsel is not willing to take the risk of using a law firm that isn’t on the “big law” list for fear of being blamed if the outcome is not desirable.