In 2020, Overspending on Outside Counsel is a Major Concern Among Legal Departments
of survey respondents have at least some concern that they over overspending on outside counsel
a. Nearly Three-Quarters of In-House Counsel Are “Concerned” About Overspending on Outside Counsel and Many are Highly Concerned
Our survey reveals that concerns about overspending on outside counsel are, quite frankly, rampant within the in-house legal community. As the following chart shows, almost three-quarters (73%) of survey respondents have at least some concern that they over overspending on outside counsel, including 20% who are “Very Concerned” and 6% who are “Extremely Concerned”:
How concerned are you that your company is overspending on outside legal services?
The qualitative feedback from our respondents highlights the anxiety in-house counsel have about overspending.
A sample of in-house counsel comments:
- “I worry that we are getting overcharged for legal services.”
- “We are provided with estimates … and the bills we get are a lot higher.”
- “Assigning higher level folks matters that could be handled by a junior.”
- “Billing for every little thing.”
- “Lack of controls by outside law firms”
- “Excessive time to complete tasks”
- “We pay for advice we do not really need”
- “We are not getting value for money”
- “Overstaffing a matter”
- “Spending a lot of money and not getting the quality / useful help”
- “Paying a lot, not getting closure”
- “Hourly rates are too high”
- “Unknown fees before work starts”
- “Big Firm's dishonesty in billing”
- "Time based billing is sometimes not worth the services”
- “Are we getting value for the amount we spend?”
- “Lack of visibility / control, duplication of efforts”
- “Redundancy in efforts/time/issues (ie multiple calls on same issues, bringing in new partners and having to re-cover fact patterns, etc)”
- “Lack of creativity in cost efficiencies for smaller matters”
- “Lack of communication before work is begun”
- “Hourly billing provides for a natural tension between client and attorneys”
- “Paying a premium for services that could be done faster with internal resources”
- “Over-inflated time”
- “Not knowing potential range of costs up front”
“Are we getting value for the amount we spend?”
One respondent took the opportunity to unload a veritable laundry list of cost concerns:
“(a) Failure of [outside] counsel to take time to understand in house counsel's assessment of legal & business priorities;
(b) failure to quickly identify & raise w/ in house counsel all spotted issues/potential issues relevant to a given assignment and obtain (and adhere to) direction from in house counsel regarding which issues to pursue and which issues client is willing to assume risk before o/s counsel devotes excessive billable hours to issues client willing to risk or to issues that intrigue or interest outside counsel;
(c) failure to attend sufficiently and timely to assigned matters so as to avoid excessive staffing and billing when particular matter nears a crisis or conclusion.”
b. Fear of Over Spending (“FOOS”): Key Takeaways for In-House Counsel
If you are an in-house lawyer, this survey should leave no doubt that the great majority of your in-house peers, independent of company size and industry, have major concerns about overbilling by outside law firms.
Our respondents' comments are focused on three main culprits:
- Inefficiency (possibly even dishonesty) resulting in law firms charging too much for too little;
- Lack of flexibility in staffing and billing practices (resulting in unnecessary and redundant billable hours); and
- Law firms’ continuing failure to provide “actionable” advice to their clients.
The authors advise General Counsel and other legal department managers to thoroughly evaluate what can be done with regard to their internal processes, their relationships with law firms, and the opportunities for third party tools and services to help calm the “FOOS” (fear of over-spending) that, statistically speaking, most of your in-house legal staff are experiencing right now.
Those legal departments which do take the time to perform such an evaluation are likely to be rewarded both in terms of “hard cost” savings (reduced legal spending) and “soft cost” savings (reduced stress and reduced busy work by in-house legal staff).
“The authors advise General Counsel and other legal department managers to thoroughly evaluate what can be done”