In-House Counsel

How Consultants Recommend Cutting Legal Bills

In-house columnist Mark Herrmann identifies what looks like the wave of the future.

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If you ask a consultant to reduce your legal bills, what would the consultant say?

If I were you, I’d be interested in the answer to that question. If I were a corporation, I’d want to reduce costs. And if I were a law firm, I’d want to know what consultants were proposing that would reduce demand for my services.

So here goes:

Consultants recommend entering alternative fee arrangements. I’ve written about this repeatedly in the past. Many corporations are already using alternative fee deals. My sense is that this is old news, but you still run into companies doing business with law firms the old-fashioned way — paying by the hour.

Consultants also recommend pushing ediscovery work to ediscovery vendors. My sense is that this, too, is already widespread. Law firms resisted the use of ediscovery vendors 15 years ago — “What of quality control? Our lawyers must read every document! We personally must do the work!” — but law firms long ago gave up that fight.

What do consultants suggest that’s actually new?

Consultants suggest “partnering” with law firms. An associate at a law firm costs a ton. A lawyer from a legal vendor is cheaper — maybe half the price. And an in-house lawyer is cheaper still. If corporations can replace bodies at law firms with bodies from legal vendors or in-house bodies, then corporations can save money.

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Suppose you have a case that would require five lawyers at a firm. You tell the firm that you’re going to replace one of the lawyers at the firm with a substitute — someone from a legal vendor or the in-house department. Thus, instead of staffing the case with senior partner, junior partner, senior associate, junior associate, very junior associate, the firm must instead staff the case with a substitute for one of those five slots.

I can hear the law firms complaining already: “We didn’t train the replacement lawyer! We didn’t hire that person! We can’t fire him (or her). We can’t dock a bonus. We can’t reprimand. If the person performs poorly, there’s no price to be paid in not getting staffed on future cases. What happens if the replacement lawyer commits malpractice? We won’t stand for it!”

Frankly, I’m pretty sympathetic to this. (If you assume, as I do, that all lawyers you haven’t worked with before are incompetent, then the firm partner is being asked to put an incompetent lawyer on her team. That’s awfully dangerous.)

You’d have to substitute lawyers very carefully. You’re not substituting the replacement lawyer for one of the firm’s partners. The senior folks are, after all, the reason you hired the law firm in the first place.

Smart corporations wouldn’t substitute a replacement lawyer for the senior associate. I’m speaking from personal experience — 17 years as a partner at a big firm — now. I spent a long time trying to find associates who I was willing to let help me on my cases. I’d staff cases only with senior associates who could suggest important issues to investigate, do legal and factual research intelligently, write persuasive briefs efficiently, take depositions of most witnesses, and so on. And those people had grown up within our firm. They knew the systems, the technology, the procedures, and the like. Replacing a critical piece of the team with a new person of unknown quality would be a mistake.

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But how about substituting the replacement lawyer further down the food chain?

Many cases involve routine discovery. Maybe you could substitute a replacement lawyer for the firm’s very junior associate who would otherwise be copying form discovery from the last case to use in the new case. Or assembling the usual boilerplate objections to the other side’s discovery. Or perhaps deposing custodians of records or other tangential witnesses.

I understand that this would cut into law firms’ profits. But the outsourcing of ediscovery also cut into law firms’ profits.

And, if you think about the issue more broadly, this improves the life of law firm associates.

If you inflict the pain of routine, repetitive, relatively unimportant tasks only on folks from outside your firm — and you give your associates the more interesting and challenging assignments — that might not be such a bad thing. I know that it reduces your “profits per partner,” but it might increase your “job satisfaction per lawyer,” which has benefits of its own. Many big firms now complain that new associates work for the firms for two or three years, pay off their student loans, and then move on to do other things. That high turnover is expensive. Maybe, if the jobs at firms were more interesting, you could reduce turnover and save money.

In any event, I suspect that law firms will have to start thinking about this. Some corporations are already “partnering” with their firms on big cases; consultants are recommending it; and it appears to be the wave of the future.

Mark Herrmann spent 17 years as a partner at a leading international law firm and is now responsible for litigation and employment matters at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at [email protected].

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