Why Are In-House Legal Departments Turning To Temporary Attorneys?
Corporations will do well to strategically utilize the first-tier ad hoc attorneys now at their disposal.
Ed. note: This is the latest installment in a series of posts Lateral Link’s team of expert contributors. Danielle Lackey is the CEO of Lateral Link’s variable staffing division, CadenceCounsel — a female owned and operated enterprise. Danielle leads all facets of the business, from recruiting top talent to consulting with law firms and legal departments to identify and fulfill their fluctuating business demands. Prior to forming CadenceCounsel in 2013, Danielle practiced as a white-collar litigator at Latham & Watkins. She holds a J.D. with distinction from Stanford Law School and B.A. from Brown University, magna cum laude, Phi Beta Kappa.
Converting fixed costs to variable – a key managerial economics concept – has seen widespread corporate adoption in recent years. Because labor is often the biggest line item on the P&L, a variable workforce is the fundamental component of this shift. Companies ranging from startups to Fortune 500s employ this model with great success, and an estimated 40% of the American workforce will be “independent workers” by 2020.
The value proposition for in-house legal departments to adopt this business trend is particularly compelling. Thanks to the recent emergence of a class of elite lawyers seeking variable engagements – what we call Ad Hoc Counsel® – corporate legal departments can strategically tailor their teams to maximize legal budgets while minimizing risk. As discussed earlier in this column, these Ad Hoc Counsel are former “stars” at distinguished law firms and in-house who handle substantive work; from drafting and negotiating, to joining trial or deal teams, to providing high-level substantive expertise in niche and cutting-edge areas (e.g., regulatory compliance, privacy, healthcare).
We previously addressed the profitability of variable staffing at law firms, and in-house law departments can reap similar benefits.
Why engage Ad Hoc Counsel?
- Enhanced Economic Agility: Corporate law departments grow as the company and its legal demands expand. Unlike at law firms where increased work means increased profits, legal is considered a cost center for corporate budgeting. It is critical, then, for law departments to react nimbly to changes – whether large or small – such as shifting market conditions, seasonal needs (e.g., proxy season), new lawsuits or regulations, new products or services. Ad Hoc Counsel provide a variable resource with no long-term commitment or overhead, deployed or recalled on demand.
- Maximize Internal Resources: One of the job features that in-house lawyers typically enjoy is the variety of issues they tackle. Expanding their legal expertise beyond the more narrow practice areas they handled as law firm attorneys can be professionally fulfilling. The appeal of this variety (and the value to the company) tends to plummet, however, when senior attorneys are diverted to non-core legal tasks – work that must get done, isn’t substantial enough to require a new full-time attorney, and doesn’t justify incurring outside counsel rates. Calling in a skilled attorney to handle these matters on a variable basis reallocates in-house legal talent to its most productive uses.
- Diversity: Many General Counsel and their teams are deeply committed to promoting diversity in the legal profession – both within their own departments, and at the law firms they engage. Some GCs are beginning to “vote with their feet” by moving their business to the firms that truly embrace diversity. In addition, while many have close relationships with women and minority owned law firms to which they would like to send large matters, they have concerns about the firms’ capacity to take on these larger engagements. These General Counsel now encourage diverse law firms to engage ad hoc attorneys to scale to demand to comfortably fulfill the legal needs.
When to engage Ad Hoc Counsel?
- Company Growth: Expansion creates atypical workloads for law departments that are not indicative of post-growth needs. Instead of investing resources in costly permanent hires, ad hoc attorneys: (1) parachute in for the transition, and (2) allow corporations to gauge the long-term workload without over- or under-committing. Furthermore, expansions raise one-time legal questions (regulatory compliance, state-specific legal constraints, industry-specific expertise) that don’t justify a permanent hire.
- Discrete Legal Challenges: Though in-house departments are structured to handle the ongoing business needs of the company, legal issues regularly pop up that are – thankfully – out of the ordinary. Litigation is a prime example. Assembling a combination of outside counsel and ad hoc attorneys reduces both the actual expense of litigation, as well as the secondary expense of reduced in-house productivity. Lawsuits can create a flurry of activity for a corporate legal department that detracts from normal responsibilities; Ad Hoc Counsel plug gaps and lighten workloads to keep law departments running smoothly.
- Equilibrium Between Internal and Outside Legal Spend: Corporations often feel a pull between adding “headcount” (or obtaining budget approval to hire) on the one hand, and the cost of outside counsel on the other. Ad hoc attorneys bridge this gap because of their efficient rates, variable compensation, and easy scalability — while also providing concrete data to General Counsel about whether there is indeed enough work to justify an in-house hire.
Ad hoc attorneys are not a replacement for General Counsel or their deputies (or even their deputies’ deputies), but as workflows fluctuate and required expertise varies, corporations will do well to strategically utilize the first-tier ad hoc attorneys now at their disposal.
Danielle Lackey is the CEO of Cadence Counsel. Now a division of Lateral Link, Cadence provides experienced, highly-credentialed Ad Hoc Counsel® to join legal teams for variable engagements. Danielle can be reached at dlackey@cadencecounsel.com.
