The outside counsel balancing act: key steps for engagement

Corporate general counsel are pressed for time. Stretched legal departments struggle to best serve business needs in the face of budget, staffing and time constraints. An issue corporate counsel face time and again: When should I turn to outside counsel? This guide can help you decide.

Understand the most common matters to outsource
What do most departments outsource? A recent Thomson Reuters survey revealed the top three areas: litigation (75 percent), M&A work (57 percent) and IP requirements (40 percent).

The complexity of an issue is a key reason departments bring in outside counsel. In-house teams are most dependent on outside counsel for high-stakes litigation/disputes (67 percent), involvement of multiple/international jurisdictions (51 percent) and the involvement of complicated legal concepts (48 percent).

What’s kept in-house? The top four tasks are internal information gathering, managing the legal hold process, initial information gathering for discovery and analyzing the likelihood of success in pursuing settlement.

Conduct a risk assessment
If you’re considering outsourcing a matter, first develop a detailed assessment of what you would need from outside counsel.

Start by categorizing: Is it a low, medium or high risk matter? Outside counsel needs for a high-risk case are quite different than those for a low-risk one.

Analyze your company’s legal needs by asking: What are the goals? Whether it’s M&A work, a high-stakes dispute or a commercial contract, assessing the company’s goals can help determine if outside legal spend is worth it.

Consider the time spent
What is the value of your time? Look at the issues and projects on your desk and consider which items are top priorities, as well as how much time each will take.

Partnering with outside counsel may free up your time for other tasks. Outsourcing a time-intensive or complicated matter enables you to allot the saved time to activities outside counsel can’t handle, such as advising the board of directors or providing leadership guidance.

Depending on the matter, other timesavers include shifting work from lawyers to paralegals or using an alternative staffing arrangement, such as contract attorneys.

Weigh the budget implications
Besieged by budget woes? Outside counsel may not be an option. Among the 25 percent of survey respondents who decreased their use of outside counsel, 61 percent attributed the decline to a cost- containment strategy.

If engaging outside counsel is within your budget, there are still ways to reduce outside legal spend. Ask outside counsel to use alternative fee arrangements, or find alternative sources for the work you need. Different firms – from Big Law to one-person shops – can meet your needs for different types of cases.