A collaborative approach to staffing

In today's economic environment, corporate clients see outside counsel as a fungible commodity, while the outside lawyers often see themselves as unique and valuable.

This is not the foundation for a long-term, healthy relationship.

I've participated in recent conversations between in-house and outside counsel in which inside counsel expressed their concern over the escalating cost of legal services. They seemed to concur that the greatest impact on cost is not from the hourly rate being charged but from the way outside counsel staff their matters. And this staffing issue goes to the heart of whether lawyers are unique or merely another commodity.

From the in-house counsel's perspective, whom the law firm has working on a matter is significant. Is it a partner with a higher rate but greater experience who can rip through the analysis and work? Is it a young associate who will take longer to get up to speed but whose rate is lower? And what is the fee arrangement that encompasses all the lawyers used to staff the matter: a blended rate, pure hourly figure or a variation alternative fee?

These are factors that general counsel are reviewing. Corporate clients increasingly feel that they should be able to direct how their matters are staffed, going back to the initial budget for the matter.

However, when clients impose strict guidelines on a law firm in terms of staffing, the firm may not wish to adjust within the set parameters, particularly for a flat fee.

The belief is that once a corporate client gets a fixed fee, that client should no longer care about anything but receiving a quality final product. The intricacies of how to do that should then be left to the law firm. If that happens, the law firm can use less or more expensive staff, fewer or more technological improvements, and younger or more experienced lawyers.

The clients should not care. And if they do, one might ask why. There may be a hidden agenda that you should know about. Or they just may want to have some additional assurance that their legal costs are known in advance and under control.

To the extent that in-house counsel do care, they can set forth their staffing wishes and create a formal checklist that defines exactly what is expected of the law firm's staffing. The checklist should cover both qualitative issues and procedural details in such a way that clearly defines the client's fundamental staffing satisfaction.

For example, stipulate that the firm shall staff each matter with attorney and legal assistant expertise appropriate for the circumstances, giving due regard for expertise, efficiency and cost. The individuals assigned and their billing rates should be designated up front. Also state that there should be no start-up costs for educating new team members.

A final stipulation should be that if the firm does need to make a change in staffing, it should be in consultation with in-house counsel.

By taking such an approach, the firm does give up total control over staffing, but it addresses an important client concern and enables the firm to be more structured in its staffing in order to meet cost objectives. It reinforces listening to and collaborating with clients, which is the best way to keep them.