QuickCounsel

Outside Counsel Retention Agreements

Overview Drafting Retention Agreements       Learn From Experience       Use Matter Type-Specific Agreements       Common Terms Enforcing Retention Agreements Additional Resources Rate this QuickCounsel

Overview

When corporate counsel hire an outside law firm, the retention agreement can take many forms. Although many law departments use retention agreements provided by their various firms, it makes more sense for the law department to set up its own set of uniform guidelines, and secure agreement to those terms from all of the firms that it manages. It may be a simple letter with a few terms outlined, or it may be a long document complete with templates, sample forms, and other exhibits. Although there is no single “right” way to draft a retention agreement, a well-drafted agreement that is enforced can be one of the most effective tools that a law department uses to control spending and manage the activities of its outside counsel.

Back to top

Drafting Retention Agreements

Draft an agreement with clear, effective terms. If you’ve worked with outside counsel in the past, you know some of the pitfalls to avoid and practices to encourage. In addition, include standard terms regarding conflicts, confidentiality, and other rules of engagement that apply to all of your outside counsel.

Also, it helps to draw on past experiences with outside counsel. However, it’s also useful to take a look at agreements used by other law departments. At the end of this QuickCounsel, you’ll find links to sample retention agreements as well as a matrix of common retention agreement terms that allows you to compare at a glance different approaches to the same term.

Back to top

Learn From Experience

Consider the kinds of management and billing issues that have been problematic in the past, and include terms that will prevent those situations in the future. For example, if a firm drafted lengthy motions in limine even though your company has a standard set that you use before every trial, you might include a term prohibiting substantial drafting fees without prior approval, or a term requiring a detailed budget that will provide an opportunity to discuss more efficient accomplishment of major tasks. Remember that retention agreements also can help your in-house lawyers adhere to best practices. In the example above, the corporate attorney should have provided the firm with the company’s standard motions well in advance of trial.

Also, think about some of your best experiences with outside counsel. For example, if you appreciated it when an attorney kept you apprised of developments in a slow-moving but complicated real estate transaction, then consider adding a periodic status update requirement to your retention policy.

Back to top

Use Matter Type-Specific Agreements

Due to the inherent differences in different categories of legal work, consider drafting and maintaining several retention agreements that map to your company’s needs. For example, you may need a litigation agreement, an intellectual property agreement, and a deals and transactions agreement. For version control and consistency reasons, it is advisable to structure your retention agreement as a core document with attachments.

Common Terms

According to the 2009 ACC/Serengeti Managing Outside Counsel Survey Benchmarking Worksheet, the following are the most commonly included terms in retention agreements:

Monthly/periodic bills Budgets/associated reports No change of attorneys without approval Billing formats/details Discounts from standard hourly rates Early case assessments Periodic written status updates Limits on costs (copies, faxes, etc.) No change of rates without approval Limits on travel expenses

Restrictions on press releases and public statements Client ownership of work product End of matter assessments Electronic billing Technology requirements Adherence to company policy regarding use of alternative dispute resolution Adherence to diversity policy Required use of specific vendors (e.g. court reporting services) Use of UTBMS codes in billings Adherence to pro-bono policy

Most retention agreements also include standard terms regarding the following company policies:

Back to top

Enforcing Retention Agreements

Monitor and enforce your agreements. Despite their best intentions, most law firms will breach your guidelines on occasion. These may not be intentional violations, but rather, oversights due to personnel changes or misunderstandings. In those instances, you need processes that will catch invoices or practices that violate your retention agreement.

Many law departments manually review paper bills for compliance with retention terms relating to billing and expenses. An e-billing system with matter management features can provide more efficient ways to enforce retention agreement terms by automatically auditing bills for violations, and even withholding bills from processing if requirements relating to periodic status updates, budgets, or case assessments are not followed. For more information about such systems, see the ACC QuickCounsel on e-billing.

Back to top

Additional Resources

ACC Resources

Sponsor Resources

Back to top

Have an idea for a quick counsel or interested in writing one?

• Submit your ideas by filling out our online topic proposal form.

The information in this QuickCounsel should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or the ACC. This QuickCounsel is not intended as a definitive statement on the subject addressed. Rather, it is intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers.

Back to top

Published December 10, 2009

Reprinted with permission from the Association of Corporate Counsel
2010 All Rights Reserved
www.acc.com