In-House Counsel

In-House Lawyers Plan To INCREASE Spend on Outside Counsel: Lobster Dinners For Everyone!

2018 could be the first year to see an increase in spend since 2007.

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For a decade now, the trend has been for in-house counsel to decrease their spend with outside attorneys while they bring more and more work in-house. It’s cheaper that way.

But Altman Weil’s annual in-house survey suggests that trend is going to finally start moving in the other direction. From Corporate Counsel:

The report said 40 percent of respondents plan to increase their outside counsel spend in 2018, while only 33 percent anticipate a decrease. While that hasn’t happened since before the financial crisis of 2008, the report said the gap between internal and outside counsel spend has been narrowing over the last three years.

“After years of belt-tightening, perhaps some of the [financial] pressure is easing,” said Rees Morrison, an Altman Weil principal and co-author of the report. “And perhaps some people are just being more honest. For years it’s been politically correct to say they were doing more with less every year.”

This is good news for everybody. Seriously, EVERYBODY WINS.

* Biglaw attorneys get more money. They like money.

* In-house attorneys get less work they don’t want to do. They like working on things they should be working on, not on things that outside counsel are supposed to do.

There is one main reason to use outside counsel: manpower. Biglaw firms can just throw bodies at your problem. Using them for their raw hours power helps in-house lawyers. In-house departments are small (relative to a Biglaw firm) and you don’t want to tax the whole department on one or two special projects.

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You also don’t want to tax them with “churn” stuff that is not particularly interesting or important, but just takes a lot of time. That’s the other thing outside counsel can be useful for. You’ve got something annoying that has to be done every six months, throw that to Biglaw. Then you can focus on the interesting parts of your job and getting home in time for dinner. Using outside counsel efficiently and effectively just makes your life better as an in-house attorney.

Biglaw is happy to do the work. They’ve got junior associates who need to be trained with your churn. They’ve got senior people who live for the special, novel issues of your business. Again, everybody wins.

And it’s not like large corporate clients can’t afford to ship out the work. The market is up, Cut Cut Cut Cut Cut Reform is happening. Trickle those breaks down to your outside counsel. What else are you going to do with it? You can tell the mouth breathers on television that tax reform will “inspire” capital investments, but we know better. The lawyers are going to taste those tax breaks long before the lower-middle class wage earner.

Of course, law firms are going to have to compete for the work:

Asked what percentage of outside counsel fees last year were for work that could have been done by many different law firms, the median response was 41 percent to 50 percent. This suggests “that law departments have considerable negotiating power,” the report added.

Morrison noted, “It may be that many law firms can do a fair portion of your work, but you still have to find them and get comfortable with them. It doesn’t mean we know who they are.”

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The Knicks might not stink this year. I suggest that you Biglaw rainmakers get some tickets: looks like there will be some in-house lawyers who will need to be wined and dined in 2018.

Elie Mystal is the Executive Editor of Above the Law and the Legal Editor for More Perfect. He can be reached @ElieNYC on Twitter, or at elie@abovethelaw.com. He will resist.

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