Pervasive mistrust by law departments who doubt that law firms manage costs well

Lexakos recently released the results of its Chief Legal Officer 2008 Strategic Planning Survey of more than 100 chief legal officers. According to the press release by Rick Wolf, Lexakos’ founder, “only 21% trust outside counsel to manage costs and choose the best alternatives for document review.” A bit more than one half of the respondents “do not believe outside counsel has a vested interest in devising cost-effective document review strategies.” Doubts by in-house lawyers about external counsel’s fiscal responsibility on litigation support are not the only manifestations of mistrust.

Other areas of wariness surface from time to time (See my posts of Feb. 8, 2006 and Feb. 16, 2006: hourly rates of associates; May 11, 2007: inexperienced associates, and references cited; Nov. 13, 2007: uncertainty of legal fees; March 9, 2007: scant use of paralegals; Jan. 25, 2006: annual rate increases; Feb. 16, 2006 and May 18, 2007: net income per partner; and Dec. 16, 2007: average profit margins.).

The press particularly makes much of suspicions by law departments about law-firm bill padding. This common eruption spills out lava about how often firms that inflate their bills (See my posts of Sept. 17, 2006: high rates of padding; Aug. 26, 2006: perception that firms pad bills; July 17, 2007: trend in such perceptions; Nov. 13, 2007: weaknesses of hourly billing; July 16, 2006: law departments slam law firms; and July 19, 2007: law firms ignore the cost of outside counsel services.). Departments especially worry about extra hours tucked into bills if law firms impose minimum chargeable hour requirements (See my posts of Nov. 2, 2006 and Aug. 22, 2006.).