Pay BigLaw Less -- GCs Seek Alternative Fee Arrangements

By Gabriella Khorasanee, JD on July 15, 2013 | Last updated on March 21, 2019

Executive research firm and events organizer Consero, together with Applied Discovery, Inc., released a report last week of their findings from 52 GCs from Fortune 1000 companies, who gathered to share best practices and learn from one another. The research conducted covered areas ranging from cyber security, social media and succession planning. But, the big take away had to do with outside counsel.

No big surprise, right? But BigLaw costs big bucks. Here are three things that the leading GCs are doing to keep their legal expenses in check.

Don’t just blindly submit legal bills to be paid by your finance department. Your legal department has hired BigLaw to do the work, it’s up to you to make sure BigLaw isn’t over-charging you. Make sure that there aren’t too many unrelated charges (more dinners than billable hours?). Also, do you really need to be paying full price for a first year associate’s research? Discuss the bill with your contact partner at your chosen firm — there’s always room for discounts.

2. Re-evaluate What You Outsource

Sometimes the first reaction to a problem is to assign the work to BigLaw. But when cost is an issue, re-examine the kind of work that you assign that firm and determine whether it’s something you really need to outsource, or if you can handle it in-house. Most of the attorneys in your department once worked for just that sort of firm, they can handle it.

3. Utilize Alternative Fee Arrangements

The Consero survey found that 61% of the 52 attorneys surveyed from Fortune 1000 companies utilize alternative fee arrangements, and that 60% of the attorneys plan to increase the use of alternative fee arrangements over the next twelve months.

As the name suggests, alternative fee arrangements are an alternative to the dreaded billable hours method of calculating attorney fees. Rather than basing fees on the number of hours worked, examples of alternative fee arrangements include fixed fees, negotiated fees for a group of assignments, or success-based fees. Determining what alternative fee arrangement will depend on your department, your budget, your outside counsel and the types of projects you’re working on.

Though the economy seems to be coming back slowly, it doesn’t mean that we can’t continue to cut excessive costs that drain valuable company resources. Take a few moments to review your current model. If you’re not a GC, bring it up to the head of legal in your company — maybe it will show him or her that you are GC material.

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