As published in the Association of Corporate Counsel Newsletter, February 5, 2008
You are considering new outside counsel and you've asked all of your usual questions about credentials, experience and representative clients. Are there any other questions you should be asking? Yes - and they have nothing to do with the individual attorney. Internal law firm structures can impede your outside counsel's ability to provide you with the best possible service. To fully evaluate outside counsel, you have to be willing to ask some questions about the attorney's firm. Consider asking at least the following three questions.
(1) How are you and your partners compensated?
No, you don't need to ask how much your outside counsel makes. What you care about is the mechanism by which the law firm determines the compensation of its partners. This is because the particular partner you are hiring is unlikely to personally do all of your work. Some firms compensate their partners by giving the originating partner a percentage of your total billings minus a percentage given to other partners working on your matters. This may create an incentive for the originating partner to hoard the work or steer it to the attorneys within the firm who are willing to do the work for the least compensation, even when that is not in your best interest. This is an issue for many clients because no single attorney is likely to be an expert on all of the legal and technical issues your matters raise. When your outside counsel identifies an issue that is outside of his or her core area of expertise, you want your outside counsel to walk down the hall and consult with an attorney who is an expert in that area. A law firm compensation system that causes your attorney to lose money every time he or she involves another partner may create a financial incentive not to ask for help. In addition, when the originating partner does involve other attorneys, you want your work distributed to the most appropriate and capable attorneys in the firm. Creating a financial incentive for the originating partner to distribute your work to the attorneys who will do it for the lowest percentage of the billings can make it less likely that your work will be done by the attorneys best suited to handle your matters. One of the advantages of retaining an attorney at a large firm should be the combined experience of all of the firm's attorneys. To facilitate this, consider seeking out firms that encourage collaboration by making distribution of your matters to the attorneys most capable of handling them cost neutral to the originating partner.
(2) What are your associates' billable hour requirements?
Higher billable requirements mean associates do a larger portion of their work late at night and at the end of long days. The more work a firm requires its associates do after midnight just to meet their billable hours quota, the more of your work will get done after midnight, even when your needs could have been met during regular hours by another associate. Since few attorneys work as well, or as efficiently, at 2 a.m. as they do at 2 p.m., there is a significant advantage to hiring a firm that allows its attorneys to do as much of your work as possible during regular business hours. Moreover, when the inevitable emergencies do arise, outside counsel that has more time and energy reserves to devote to your unexpected issues will provide more effective representation at those critical junctures.
(3) What is your firm's attorney turnover?
High turnover is bad for clients because the law firm is perpetually trying to get new attorneys up to speed on the details of existing matters. Even if the firm does not charge for the time it takes new attorneys to relearn the facts and law (and many do), you lose the benefit of having your outside counsel acquire long term institutional knowledge of your business, technology and personnel. Particularly in complex lawsuits that span many years, greater continuity will result in more effective representation. There is simply no substitute for going to trial with the same group of attorneys that reviewed the documents, took the depositions and wrote the motions.
You Are Entitled To Know This Information
Hiring outside counsel tends be more about hiring an individual attorney at a law firm than the law firm itself. But since the partner you meet in the conference room is not going to be doing all of your work, the quality of the representation you receive will depend on your outside counsel's entire law firm. When selecting and evaluating outside counsel, don't be afraid to ask the questions necessary to assess whether the law firm's structure is helping or hindering your attorney in meeting your needs. The answers to these questions can significantly impact the quality of your legal representation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
