Law.com published a great article in 2012, Why Do General Counsel Fire Law Firms? The article quoted two GC's who both had the same story: they fired the law firm for not properly staffing their legal work; the work was performed by more costly senior attorneys who should not have been assigned to the projects.
This article highlights two stories, which we summarize here:
Shannon Pierce, a senior counsel at natural gas distributor AGL Resources Inc., recounted an instance where she asked one of her law firms to use an associate instead of a $600-an-hour partner to write a memo. But when she got the bill, it was for the partner. "It was a $25,000 memo that should have been a $5,000 memo," Ms. Pierce said. After making several other staffing requests that went unheeded by the firm, she stopped using it.
A similar story was told by Stephen Kaplan, general counsel of Orlando-based Connextions. Mr. Kaplan hired a large Washington firm to handle a regulatory compliance matter, and he thought the law firm irm was using partners to do work that could be done by less costly second- or third-year associates. He asked the firm to assign the work to associates, but they simply refused to do so. "They said this was the way they'd always done things," Kaplan explained. Maybe for others, but not for him: "I dropped the firm."
This helps explain why it is hard for non-lawyers to manage outside counsel.
Many non-lawyer executives lack the experience to know what seniority level should be assigned to their legal work, and there is an incentive for many law firms to assign more costly senior attorneys to work that could be performed by less costly junior attorneys, or senior attorneys at a steeply discounted rate.
We wish it were not the case, but some attorneys and law firms put their economic interests ahead of the client's economic interests when staffing and billing for their work. Unless you've seen and managed a lot of legal work, it will be difficult for you to know your legal project can and should be done by a less costly lawyer. Making matters more complicated, many executives find it difficult if not impossible to challenge their law firms on legal bills.
This is just a few more reasons why most businesses should work with a part-time General Counsel to help hire and manage outside counsel.
Mark D. Walters