In House Counsel And The Selection Of Law Firms

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5 Responses

  1. Dave! says:

    Well, the “biggest and most sophisticated shop” are not necessarily the same thing. I would love to see an empirical study of results (if such a thing could be quantified easily) of boutique firms vs. similar practice areas at BIGLAW. I would wager that clients are paying a lot of over-head for practice areas they aren’t using at BIGLAW firms, and could save $$$ by outsourcing different matters to different, smaller, specialty firms.

    But I think you hit the nail on the head with in-house… since most came from big firms, there’s a big firm bias, along with the other relationship building/maintaining reasons you listed. But that street works two ways… perhaps smaller firms would get more business by not worrying as much about pricing, but building those same in-house relationships, to the extent possible.

  2. Dan says:

    Another in-house counsel might return to BIGLAW with their sky-high fees may be that, to increase their stature in the organization, they may benefit from having a bigger budget to control and the high fees charged by large law firms help justify larger budgets.

    I completely agree with Dan and with Dave that developing and maintaining friendships is a big factor that motivates in-house attorneys to choose an outside counsel. Given that lawyers tend to hire their friends, I wonder why more BIGLAW lawyers who have reliable in-house buddies to feed them work do not leave BIGLAW to set up small firms, with lower overhead, where they can capture more of the profit and make more money. I don’t know the answer, but one reason could be that being ensconced in a big law firm helps masks the fact that lawyers are chosen more for their relationships and friendships than for their skill and competence, qualities which, in litigation anyway, are exceedingly difficult to measure and compare.

  3. Dan says:

    Oops…I omitted the word “reason” in the first sentence of my post. The sentence was supposed to read: “Another reason in-house counsel might return to BIGLAW with their sky-high fees may be that, to increase their stature in the organization, they may benefit from having a bigger budget to control and the high fees charged by large law firms help justify larger budgets.” Sorry!

  4. Ken Grady says:

    First, my disclaimer. I was a partner in a BIGLAW firm. I also have been in-house counsel at four Fortune 1000 corporations, and general counsel for two of the four. Now, I have my own, solo practice law firm providing services to corporations. All of the comments have some truth to them. But one of the biggest challenges comes from the specialization of legal services. Most in-house counsel have been trained to believe they need (or at least must hire) specialists for each matter. Though many in-house counsel are now generalists, when they send work out, even if it was work they would do time permitting, they go to a specialist. Obviously, most small law firms don’t have lots of specialists and since in-house counsel prefer to keep the number of law firms they use small, they revert to using firms which have larger numbers of specialists. The urge for specialization overcomes the incentive to save money, even as much as 50% versus what a larger firm charges.

  5. Dan Hull says:

    Thanks for the mention of the WAC? post. Normally I don’t join in on the comments on my own posts–but the subject really interests me, mainly because I don’t know why great lawyers in smaller firms (less than 150) eagerly keep bottom-feeding like smart but poor 14th century peasants, thankful someone threw food their way during one of the bad years. It’s very mysterious. So here are 7 things, all just the facts, ma’am:

    1. I used to be a “BigLaw” partner and 10 years ago or so started my own firm;

    2. the lawyers at the firm I helped start at Hull McGuire can work at any law firm they want, but they choose to work at a boutique;

    3. 95% of our revenues clients come from “BigLaw” clients, and they always have been from those clients;

    4. there are LOTS of firms around these days like Hull McGuire, in US, Latin America and western Europe–for reasons which amaze me, they choose to bottom-feed rather than try to compete with “BigLaw” (there’s something timid about even the most talented in our profession, litigators included–go figure);

    5. “BigLaw” overall lawyer quality is not what it used to be–lots of people who are way less than average plague large firms because of the way “BigLaw” got big and a greater emphasis on marketing (the latter not a bad thing itself);

    6. many Fortune 500 firms prefer boutiques; and

    7. GCs are way smarter and bolder than 20 years ago–they know good lawyers when they see them, in any size firm.

    Dan Hull

    P.S. Oh yeah, if you are going to compete with “BigLaw”, do it on service, which you can easily do, because “BigLaw service” is generally really awful. (So is everyone else’s service for that matter.) So RAISE your rates and, in any event, NEVER lower them. For bet-the-company work, which boutiques can also do, raise them even higher. It works. You can trust me. I’m a lawyer. Be bold, all you high-end lawyers everywhere…and get off your damn knees.