In-House Counsel Concerned They Are Spending Too Much on Outside Counsel | Corporate Counsel - Law.com

Approximately 73% of in-house counsel believe their legal departments are spending too much on their outside counsel, according to a report published this month by In The House and LegalBillReview.com.

Chris Colvin, founder and general counsel of In The House in New York, said he is not surprised by the number of respondents who felt they were spending too much on outside counsel.

“Because of the rising costs of legal fees over time, the need for outside counsel to increase the level of efficiency by using technology or alternative billing approaches has been a topic of conversation for many years,” Colvin said.

Respondents to the survey indicated they are not getting value for their money and that outside firms take “excessive time to complete tasks.”

Colvin said many legal departments are still working to implement those kinds of tools. More than half of the respondents (55%) indicated that one of their top initiatives for 2020 was to reduce outside counsel spend.

He noted that the survey was sent to in-house counsel before the pandemic caused by the new coronavirus began. He said he would expect the number of in-house counsel who think they are spending too much on outside counsel would increase if the survey were done today.

“Anecdotally, there have been a lot of discussions recently calling for law departments to cut spending due to the uncertainty of the COVID-19 pandemic,” Colvin said.

Ryan Loro, president of Philadelphia-based LegalBillReview.com, said since the pandemic began chief financial officers are asking in-house counsel to put a greater focus on the business and to find ways to help the bottom line.

One of the ways in-house counsel can have better control over their outside counsel spend is to engage with a third-party bill review system, Loro said. About 70% of respondents indicated that they would like to use some kind of third-party billing review technology. Part of the reason, Colvin said, is because it saves in-house counsel from having an uncomfortable conversation with outside counsel.

Having in-house counsel go over each item in a bill is not the best use of their time, Colvin said. He also explained it is rare that one attorney will catch a glaring error in a bill. He also explained it is hard to tell if outside counsel is providing value by just going over the bill. Further, 48% of respondents indicated they are too busy to review bills carefully.

Loro said respondents indicated that going over bills with their outside counsel puts a strain on the relationship they have with their firms. However, 80% of respondents also noted that adopting bill review technology could put a strain on their relationship with their firms.

“Our involvement has shown to improve those relationships,” Loro said.

Almost half of the respondents (49%) said they believed their firms would come to accept the idea of using a third-party legal bill review service.

A group of 167 general counsel and senior in-house attorneys responded to the survey. The participants are involved in all industries from advertising and marketing to utilities and energy.

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