We sat down with Tom Melling, president of Serengeti Law, a Thomson Reuters business, and spoke about the ever-changing world of corporate counsel. You may recall that late last year, Serengeti released the 10th Annual ACC/Serengeti Managing Outside Counsel survey, which analyzed a decade's worth of information about the in-house/outside counsel relationship. I thought it would be great to continue our discussion on the changes in our profession, and I welcome you to share your comments and experiences with us as well.
Westlaw: Tom, you have seen significant changes in a decade of conducting this survey. Can you highlight a few of these for us?
Melling: I think we all realize that in-house counsel, now more than ever, are focusing on the need to drive efficiency in legal costs. This leads to more value-based policies to reduce overall legal spend, especially from outside the firms. Look at the stats from this year's survey: in-house counsel are embracing business-oriented techniques to reconnect the cost of legal services with value, including:
• Requiring project budgets: 65 percent of respondents now require project budgets.
• Client consent for firm staffing: 63 percent insist on no change of assigned attorneys without approval.
• Early case assessments: 60 percent require risks and potential resolution strategies.
• Issuing competitive bids for new work: 25 percent of respondents use requests for proposals (RFPs) for work to be performed by outside counsel.
• Technology requirements: 25 percent of respondents have specific technology requirements of their outside firms, like submitting bills through the client's e-billing and matter management system.
Westlaw: What is gained from this shift?
Melling : In the past, in-house counsel said to their law firms, "Build a house for me, do whatever you think is best and then send me the bill." Nobody builds a house that way, partially because of the cost, but more importantly because you really don't get the results you need or want. Now the in-house counsel attorney serves as the foreman on the site, driving the quality, cost and output. Because of this, corporate counsel can focus on both the result and managing costs.
Westlaw: How has technology supported these changes?
Melling: In-house counsel are more carefully monitoring work that is outsourced. They are turning to new client-centric technologies to better manage legal projects. From 2000 to 2009 there was a 285 percent increase in the adoption of Internet-based systems to manage legal work and a 3,064 percent increase in the adoption of e-billing. For a legal department attempting to control costs, the savings from these systems can be significant. For example, according to the survey, the average savings from electronic bill review was more than 20 percent.
Westlaw: There continues to be much discussion around AFA's. What specifically did the survey show, and how have you seen this play out with clients?
Melling : Despite the amount of publicity surrounding AFAs, a majority of work continues to be done under hourly rates. What has changed, however, is a greater willingness by both outside and in-house counsel to discuss their use. In negotiating these arrangements, savvy in-house counsel are mining data from their electronic bills and systematically collecting evaluations of outside counsel to identify high-performing law firms. Like true business managers, they are making data-driven decisions about the work they outsource. Additionally, in-house attorneys are taking the lead from other similarly situated legal departments. They are asking: "Are my peers using alternative fees? What types of retention terms are they using with their law firms? What other strategies are they employing to lower legal costs?" We have posted benchmarks from the survey on our website: http://www.serengetilaw.com/Survey/default.htm. In-house counsel can benchmark their performance against their peer legal departments.
Westlaw: In closing, I've heard you speak recently about recruitment. How have changes in the role of in-house counsel in the past decade affected how law students and high performing mid-career associates view the corporate environment?
Melling: In the past, the best and the brightest law students flooded into the arms of the law firms, or shifted from law firm to law firm or boutique. Certainly there is still some of that today. But now more than ever, the best law students see corporate counsel as the gold standard of practice. As young attorneys, they want to emulate the business-minded decision making of in-house counsel.Seasoned associates who are working with corporate counsel see in-house counsel in a new light: not only as a client, but in terms of a career path, they see in-house as a destination.