Commentary: A collaborative approach to staffing

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In today’s economic environment, corporate clients see outside counsel as a fungible commodity, while the outside lawyers still 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 where 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 a commodity.

From the in-house counsel’s perspective, who 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 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 matter is staffed, going back to the initial budget for the matter.

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

The firm can choose to use less or more expensive staff, less or more technological improvements and junior or more experienced lawyers. The clients should not care. And if they do, one might ask why. There may be a hidden agenda which you should know about. Or they just may want to have some further assurance that their legal costs are known in advance and under control.

To the extent that in-house counsel do care, in-house counsel can set forth their staffing wishes; they can 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 or to add attorneys or legal assistants, it should be in consultation with in-house counsel.

The document might also state that there will be no start-up costs for educating new team members. In addition, the firm can stipulate that if it needs to make a change in staffing or to add attorneys or legal assistants, this should be in consultation with in-house counsel.

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

Ed Poll J.D., M.B.A., CMC is the principal of LawBiz® Management, a national law firm practice management consultancy based in Venice, California. For more information, visit his Web site www.LawBiz.com or email him at [email protected].