Ninth Annual ACC/Serengeti ‘Managing Outside Counsel Survey’ Reveals In-House Counsel are Looking for Innovative, Value-Driven Solutions

Posted: Oct 19, 2009

Given this budgetary climate, in-house counsel are becoming bolder each year, requiring more from their outside counsel. This was a breakout year in which record numbers of in-house counsel took new actions to improve management of outside counsel and to reduce their legal spending.

Record numbers of in-house counsel reported that they engaged in more activities to get better control over outside legal spending. Examples of high and unprecedented levels of cost containment methods include:

*a record high

One aspect the survey addressed was the ACC Value Challenge, an initiative that seeks to reconnect the cost of legal service with value and better align the interests of clients and the firms that represent them. Overall, many respondents who sought value and responsiveness from their law firm relationships were disappointed this year.

This year, the survey for the first time collected data relating the ACC Value Challenge.  Responses indicate that a majority (57.0%) of in-house counsel believe that the value of the work performed by at least some of their outside counsel, taking into account the cost of their services, declined during the past year. More than two-thirds of in-house counsel (69.9%) provided specific suggestions to their outside counsel for increasing the value of their services. Response from outside counsel was mixed: approximately 37.5% of in-house counsel said that 10% or fewer of their firms implemented their suggestions, and 22.9% reported that 76–100% of their outside counsel implemented their suggestions.

Value-based suggestions to outside counsel included the use of case plans, tracking budgets, periodic status updates, more efficient staffing levels, better training of associates, more use of technology, and improved management of other vendors.

As part of this movement to deliver value, in-house counsel are using more sophisticated technology to track the activities of outside counsel, and have plans to do more.

Although many in-house counsel reported this year that they still use home-grown spreadsheets or other internal management software (40.0%), a growing number are moving toward Internet-based systems that help them collaborate directly with outside counsel. Such systems collect and process not only bills and budgets, but also documents, deadlines, status updates, and other key information (exposure estimates, opposing counsel, settlement amounts, etc.) directly from outside counsel who are working in the same system.  This year, 51.3% of in-house counsel reported they are planning to adopt Internet-based systems on a regular basis with their outside counsel, while at the same time, the use of law firm extranets has significantly declined in recent years (with only 8.7% of in-house counsel now using them, compared to 10.4% in 2007).  Types of Internet-based systems in-house counsel reported using this year include:

Even with these advances in collaborative technologies, most law firms are still neglecting to implement client-centric, value-based solutions and suggestions.  Therefore, in-house counsel are setting more rules governing their relationships with outside counsel.

Over the past nine years, more in-house counsel have required specific terms of retention that dictate what they expect from their outside counsel. The most common terms required of outside counsel are:

Across the board, the use of each retention requirement has generally increased over time. It is likely that this trend will continue, as many in-house counsel state that they are planning to require even more of their firms in the future.

Survey Methodology & Respondent Demographics:

The survey was conducted online in two parts: one survey to collect hourly rate data, and another for the rest of the survey questions.  The responses to the non-hourly rate survey were provided during May and June, and the responses to the hourly rate survey were provided in July and August.

• There were 390 law departments that completed the non-hourly rate portion of the survey; hourly rate tables were provided by 189 law departments.
  
  
• Respondents who are General Counsel constitute 66% of the respondents, and “assistant general counsel/staff attorney” constitute 19%. The remaining respondents include law department administrators and other in-house counsel titles.
  
  
• The breakdown of respondents by company size is: “small” companies (less than $100 million in annual revenues) - 34.6%; “medium” companies ($100 million to $1 billion in annual revenues) - 32.3%; and “large” companies (over $1 billion in annual revenues) - 33.1%.
  
  
• The breakdown of respondents by law department size is:  “small” (one attorney or no attorneys) - 29.2%; “medium” (two to ten attorneys) - 54.4%; and “large” (more than ten attorneys) - 16.4%.
  
  
• It is important to note that although large law departments capture much of the media attention, small law departments make up the majority of the in-house profession, with over 83% of the respondents coming from law departments having one to ten lawyers.

About ACC

The Association of Corporate Counsel (ACC) is the world’s largest organization serving the professional and business interests of attorneys who practice in the legal departments of corporations, associations and other private-sector organizations around the globe.  ACC promotes the common interests of its members, provides resources to help save, time money and effort, contributes to their continuing education and provides a voice on issues of global importance.  With more than 25,000 members in over 70 countries, employed by over 10,000 organizations, ACC's community connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel.®

About Serengeti Law

With more than 100,000 users in 160 countries worldwide, Serengeti is the most widely used system for legal project management and electronic billing.  In recent surveys of both law departments and law firms it is also the highest rated system for the collaborative management of legal work.  Serengeti includes online bill review/auditing, legal project collaboration (including documents, contacts, deadlines, and status updates), automated budget management, and contract management.  In-house counsel also use Serengeti to generate reports which analyze trends in project inventory, monitor spending, track budgets, assess developing areas of exposure, and compare results across similar projects.  With only an Internet connection and an hour of training, hundreds of law departments (from the Fortune 100 to companies with solo GC’s) save both time and money by working online with all of their outside counsel worldwide. More information is available at:  www.serengetilaw.com.

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EDITOR’S NOTE:

For more information or to interview ACC President Fred Krebs or ACC Deputy General Counsel and Vice President – Legal Resources James Merklinger, please contact Robin Scullin on-site at the ACC 2009 Annual Meeting at scullin@acc.com or 202.374.1169 or Marthea Davis at davis@acc.com or 202.290.5699; copies of the Executive Summary are available upon request to members of the press.  To speak with the report’s author, please contact Rob Thomas at rob.thomas@serengetilaw.com; 425.732.5518.  The full Survey Report is available on CD from Serengeti (order form available at: www.serengetilaw.com).

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