Less Work For Green Associates This Year: Survey

By Nick Brown

Law360, New York (October 19, 2009) -- Corporate legal departments are less likely to work with inexperienced outside attorneys this year, and are more concerned with reducing spending on outside counsel altogether, according to the Association of Corporate Counsel and Serengeti Law's ninth annual Managing Outside Counsel Survey.

About 70 percent of the roughly 400 respondents said they offered specific suggestions to their outside counsel about how to make services more efficient this year, while an “unprecedented” 62 percent required a minimum level of associate experience from outside counsel, according to the survey, released Monday in conjunction with the ACC's annual meeting in Boston.

The ACC, a 25,000-member organization of corporate attorneys, and Serengeti Law, a company that facilitates communication and transactions between corporate counsel and outside firms, conducted the survey by asking ACC members about various aspects of their company's approach to managing outside counsel.

As companies' legal departments become less and less immune to the corporate cutbacks they had largely escaped in recent years, the need for efficiency has driven them to run tighter ships, Rob Thomas, Serengeti's vice president of strategic development, told Law360 Monday.

“Corporate law departments have been told, 'You're not immune this year,' so they've had to look for ways not only to be more efficient internally but to have their outside counsel be more efficient,” Thomas said.

When it comes to paying high hourly rates to inexperienced associates, Thomas said, clients have begun laying down the law.

“Their approach is, why should they pay to train an associate who isn't very efficient their first year or two?” Thomas said.

But will there be any work left for first-years looking to cut their teeth?

“That's the question,” Thomas said. “Long-term, it might have to mean structural changes in the profession itself, or at law schools, a more practical education and more apprenticeship programs.”

Companies have taken numerous creative steps to save money.

About one-third of respondents reported reducing the number of outside firms they engaged, while nearly 19 percent said they asked firms to discount rates in exchange for early payments, the survey said.

Half of all respondents reported terminating outside counsel, and 61 percent have pushed for alternative fees.

“We're still seeing a fair amount of resistance by law firms when it comes to alternative fee structures, but companies are more interested in it,” Thomas said.

Fulbright & Jaworski LLC's sixth annual Litigation Trends Survey, released Thursday, offered slightly different figures, finding that only 45 percent of corporate entities engaged in alternative billing.

Regardless of figures, however, both surveys affirm the trend is increasing.

Bob Owen, head of the litigation group at Fulbright's New York office, said the economic downturn is only a part of the reason for the growing popularity of alternative fees.

“That [has started] to change not only because of the economy, but because of the escalation of associate salaries and billing rates,” Owen said.

This year marks the first time in three years that in-house counsel has listed something other than compliance and regulatory issues as their top concern, the ACC survey said.