In-house Counsel Wield Tighter Control Over Outside Counsel, Survey Shows

October 20, 2005 (Press Release) -- (Washington, DC, October 17, 2005) – In-house counsel have become more systematic in the ways that they manage their work with outside counsel according to ACC’s survey of hundreds of law departments that it conducts annually with Serengeti. From requiring budgets more often and on more types of matters to improving matter management and billing technology, in-house counsel are placing stricter controls on the work of outside counsel. As a result, the survey shows that underperforming outside counsel firms are being terminated more frequently than before. The survey results were announced today in conjunction with ACC’s 2005 Annual Meeting, a gathering of nearly 2,000 in-house counsel from around the world.

“In-house counsel continue to increase the sophistication of their efforts to enhance the quality of service provided by outside counsel and ensure better results for their companies,” commented Fred Krebs, ACC president. “The survey also shows that in-house counsel are aggressively addressing the ongoing concern of spiraling legal costs through a variety of means. It is no longer business as usual.”

The survey indicates that in-house counsel are requiring budgets from outside counsel on a more regular basis. The percentage of in-house counsel who require budgets for at least some of their legal work remained relatively flat in 2004 at 76.2 percent. However, the average percentage of matters for which budgets are required has been steadily increasing over the years from 37.5 percent in 2001 to 56.4 percent in 2004.

Budgets are a key indicator of whether in-house and outside counsel are discussing the expected strategy, staffing, and levels of activity in a meaningful way before representation begins. A budget also gives the project team a set of milestones against which progress and spending can be monitored--to see if the project is meeting initial expectations, or is taking a different tack that needs to be addressed.

The survey provides insight into other retention terms that are increasingly common and agreed to at the onset of the relationship, including required monthly/periodic bills, no change of assigned attorneys without approval, periodic written matter updates, discounts from standard hourly rates and minimum experience requirements for associates working on their matters.

However, outside counsel costs are less of an issue now than they were in previous years. For the first time, “reducing outside legal costs” was not named as the most pressing issue for in-house counsel (even though it still ranks as the second greatest concern). The top issue of concern for in-house counsel in 2004 was “keeping apprised of company activities that may have legal implications”—in other words, compliance.
“Rather than relying on ‘conventional wisdom,’ this report presents hard data about what law departments are actually doing,” said Rob Thomas, Vice-President of Strategic Development for Serengeti and author of the survey report. “Over the past five years, we have identified many significant trends in the ways that corporate counsel find, manage, evaluate and compensate their law firms.”