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Rees Morrison’s Morsels #88 – additions to earlier posts

Addendum to inside-outside comparison of interdiction. The advantages of inside lawyers and outside lawyers differ in terms of identifying and stopping wrong-doing (See my post of Dec. 27, 2008: Ron Pol quadrants *1.). My point on one perspective was that “I give a strong edge to the partner, because putting your job as inside counsel on the line to blow the whistle on a powerful executive deters you much more than the risk a partner faces of losing part of her legal fees in the future.” Ron Pol wrote with a thoughtful point: “This edge is perhaps less than it once was. With large law firms especially, and modern compensation models based more on individual earnings than traditional lockstep, individual partners face greater pressures to be ‘team players’, narrowing the gap between inside and outside counsel’s willingness to interdict/prevent wrongdoing.” Ron also gave the email of the author of the original article.

US legal outsourcing projected to reach $2 billion by 2013. Based on a recent survey and “some conservative assumptions, five years from now Ron Friedman on Dec. 9 estimates that U.S. corporate law departments will spend about 3% of their budget on legal outsourcing. This translates to US legal process outsourcing (LPO) spending in 2013 of almost $2 billion.” Ron Friedman posted this on Dec. 9, 2008. I mention this item both for its estimate of the LPO market and its implication that US law departments will spend in 2013 about $60 billion on, presumably, outside expenses.

FASB proposes a controversial requirement to disclose forecasts of maximum exposures to individual lawsuits. The Financial Accounting Standards board has shaken general counsel around the country by its proposed changes to statements No. 5 and No. 141(R). “The new rules would require a company to provide its best forecast of the maximum possible exposure to loss from litigation or the impact of mergers.” An article in the ABA J., Vol. 95, Jan. 2009 at 12, describes the firestorm of opposition to the change. Without knowing much about this area, it certainly seems that the disclosures would be layered with disclaimers and would have to give inflated guesses (See my post of Nov. 9, 2009: FASB rule change regarding expensing legal fees.).