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Large disbursements paid directly instead of through law firms should be deemed outside costs

Many law departments specify in their outside counsel guidelines that if a law firm anticipates an external expenditure above a certain amount — perhaps $10,000, such as for an expert witness or storage on servers, the law firm should have the vendor bill the law department directly. Whether those payments to third parties that might otherwise flow through a law firm bill are treated as internal law department expenses or as external expenses is an open question.

I submit that the law department should treat those expenditures as external expenses.