It is no secret that money is on the minds of general counsel everywhere.
"The cost pressure on in-house counsel has been fairly steady over the past few years, but in the last nine months, it has just accelerated," Daniel J. DiLucchio, principal at Altman Weil, said.
For most corporate counsel, cost-cutting is the major concern these days. And general counsel are attempting to reach their companies' bottom lines in various ways.
USE OF ALTERNATIVE FEE ARRANGEMENTS
Perhaps the biggest talk of the town at corporate law departments is the use of alternative fee arrangements. Over the last six to nine months, there has been "a tremendous amount of activity in the alternative fee arrangements arena," DiLucchio said, adding that one of the ways he's measuring that activity is through talking with his law firm clients, some of whom are now looking for ways to structure alternative fee arrangements in order to serve existing and prospective corporate clients.
There's certainly a lot of talk about this. In a February article about tying outside legal costs to value, Altman Weil's Pamela Woldow discussed the various ways alternative fee arrangements are manifesting themselves in law department practice. The most common, she wrote, include procuring work through RFPs or tenders that specify acceptable arrangements; imposing billing hour limits and rewarding firms for crafting alternative fee structures; reducing the total number of outside providers or sticking to a preferred outside counsel list; and opting for value-based fees, which are based on the type of work performed and the value it has to the client, rather than a strict hourly measure.
But there's trouble with tracking alternative fee arrangements -- and whether they actually work. For starters, it isn't easy even coming up with a universal definition of what an alternative fee arrangement is, Jon Bellis, who leads the law department consulting practice at Hildebrandt, said.
For instance, do alternative arrangements mean billing alternatives, such as fixed fees as opposed to billable hour rates, or in some cases, do they simply mean ensuring that billing rates are in fair proportion to the work provided? Bellis adds that he isn't seeing alternatives to the billable hour so much as clients concerned with getting bigger discounts and sticking to harder budgets, in order to ensure they are getting a fair deal.
DiLucchio said he has seen some arrangements for a price structure other than an hourly fee, but that isn't all there is to alternative fee arrangements. "It's not just the fee structure that needs to change; it's how you deliver the work," DiLucchio said.
In other words, don't just think "billing" when it comes to alternative arrangements -- think more in terms of overall "pricing" and "value" to the corporate client.
According to a recent article
in the Fulton County Daily Report
, a Legal
affiliate, firms need to think "efficiency" and "predictable budgets" -- not just lower hourly rates. For example, some general counsel are looking at how firms use technology in the effort to increase efficiency, DiLucchio said. Others are looking at how effectively firms are using associates, paralegals and other staff, and whether there's evidence of efforts by the firm to increase efficiency by delegating work to the right people.*
SingleSource Services has an alternative solution. Unlimited HR legal support, for a flat monthly rate of $250. GC can use this as a second opinion, or buy enough seats that HR can call direct, avoiding tying up time better used elsewhere. Today, there is no such thing as not enough legal support. SingleSource offers a cost effective alternative, targeted and direct. Speak to Paul about this directly and get the assistance you need!