Inside Counsel: The work allocation debate: In-house vs. outside counsel

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Inside Counsel: The work allocation debate: In-house vs. outside counsel

Originally Published in Inside Counsel | June 13, 2014 | By Paul Mandell

Deciding when to send work to an outside firm can be a difficult challenge for general counsel. GCs have a strong incentive to retain work for their internal teams, given the view that work done internally is typically less expensive. However, GCs often need the expertise, resources or arms-length representation that only outside counsel can provide. The following are some broad tips to alleviate the stress in such circumstances and help you expedite this decision-making process to get the necessary work going.

Assess your needs: Ideally, decisions about whether to keep work or send work to outside counsel begin well before the work needs to be done. As a starting point, every GC should have a good handle on current and imminent needs, including volume and nature of work, as well as who is responsible for the work’s completion. Only once you have assessed the current allocation of work, including related costs and value contributed by the relevant parties, can you make informed decisions about what resources are being applied efficiently in house, where additional investment in in-house infrastructure would be appropriate, and what categories of work should go straight to outside counsel.

“It is important to perform this type of assessment on an ongoing basis,” says Michael Shea, European Chief Counsel for Elavon Financial Services, U.S. Bank’s European subsidiary. “During the first project for which we had to assess our ability to use a given product in multiple jurisdictions, we clearly needed outside counsel to coordinate the process. By the third time we went through that sort of exercise, we could handle the supervision in house. You learn, your skills expand, you adapt.”

Automate transactional work where most efficient: Following your assessment of the treatment of existing work, you should explore whether there are opportunities for automation of work. If there are, the next question is whether that automation can be most efficiently tackled in house or by outside counsel. In many circumstances, the in-house team has the most efficient means to automate routine legal tasks. However, when outside counsel has existing software or cost-effective processes that leverage economies of scale across multiple clients, automation may be best suited for outsourcing to a law firm, or perhaps another kind of service provider. The decision where to send such work ultimately rests on where you can maximize quality and minimize cost.

Divide and conquer: When sensitive matters of significance arise, many GCs naturally turn to outside counsel. Government investigations, high-stakes litigation, and other similarly critical work is often best suited to outside counsel. However, when you engage an outside firm to manage a matter of this sort, you may not need to outsource every element of the matter. Rather, you should give thought to, and ask outside counsel to explore, what pieces can be supported by the company without compromising the work of the outside firm.

David Mills, a business litigation partner at Cooley LLC and former federal prosecutor who now handles complex litigation and investigations, emphasizes the importance of ensuring that outside counsel is entirely on board with this approach. He notes, “Building an integrated team with in-house resources and outside counsel can help develop critical information quickly and efficiently; the key is clearly defining roles and expectations up front to avoid miscommunication and ensure the right people are on each task.”

Outside counsel are critical assets of every in-house legal team. However, as with any other kind of valuable resource, these legal colleagues should be leveraged efficiently. By considering the above strategies, you may ease the process of finding your optimal relationship with outside counsel, and thereby remove the delays and anxiety that come with allocating work between them and your internal team in the future.