For in-house counsel, the typical engagement decision is to hire a firm you’ve worked with and that appears to have the requisite expertise and geographic footprint. Unfortunately, the success of that engagement will be constrained by the size, quality, availability and motivation of the firm’s talent pool, however big and prestigious it is. 

There’s an alternative: appointing a dedicated project manager, independent of any firm, that has the time, experience and flexibility to identify the requisite talent, with whatever firm they’re affiliated, solely on the basis of expertise, price and availability, and thereafter to manage the team in the client’s interests. This process will produce lower fees, a better client experience, better lawyer experience and better, faster, and cheaper outcomes. In sum, hire the talent, not the firm.

However big the firm, its talent pool will never contain all the qualified and available candidates. Moreover, relationship partners who would typically staff and manage engagements are often too time constrained and distracted, conflicted, and inadequately trained to be effective project managers. This situation is aggravated by origination-based compensation arrangements, which skew lawyers’ attention toward matters they originate and away from those they service. These compensation arrangements can frustrate the promise of collaboration offered by most firms, especially the large ones.

This problem is especially pronounced if the organization that’s looking for outside counsel doesn’t have a general counsel. In these cases, the company is effectively putting the firm’s relationship partner into that role. In addition to all the obvious conflicts this creates, it will likely end up costing many times the salary of a general counsel.

Traditional law firms, often seen as unchallenged legal experts in all disciplines, should face competition from alternative business models that prioritize flexibility, cost-efficiency and direct access to specialized talent. This is increasingly relevant in today’s environment of accelerating firm mergers, increasing fees and growing client dissatisfaction.

Managing the relationship

In a typical engagement, the client contacts someone they know in a firm. This person is often referred to as the relationship partner. This partner is charged with staffing and managing the engagement. They do so by selecting lawyers exclusively from within their firm. At that moment, the size and geographic footprint of even the largest firm can become a weak point. The larger the firm, the less likely the relationship partner will even know the people to whom they delegate the project. More importantly, the client will never know if the required expertise is a particular strength of that firm, if the necessary talent in the firm is readily available or motivated, or if there’s talent outside the firm that’s better, more available, more motivated, and more cost effective.

The problems with this traditional model are material and manifest.

First, the relationship partner is tasked with working on their own matters and originating new business while simultaneously staffing and managing projects. If the matter is beyond their expertise the situation is even worse. The relationship partner must then refer the matter to another partner with the appropriate experience. It then becomes this second partner, deprived of origination credit and perhaps unknown to the client, who must staff and manage the engagement.

Second, the relationship partner rarely has the training or the tools to manage the project well. While it has been reported in a recent survey that just over 50% of surveyed firms use some form of legal project plans and some firms have hired non-lawyer “legal project managers,” anecdotally they appear rare. Perhaps more importantly and revealingly, “legal project managers still struggle to get the level of authority that project managers have outside the legal profession,” the survey report says. 

Third, the talent pool available to the relationship partner is limited to those employed by their firm. However large the firm, it will never have all the competent lawyers in the required subject. The problem is aggravated as associates in large firms feel increasingly like disposable and overworked cogs without mentors to guide and promote them in their careers. In this environment, motivation and energy wane and with them the quality of the work product.

Fourth, the origination based compensation model employed by most firms creates disincentives for partners to work on projects they don’t originate but merely service. At any given moment a partner must allocate their time and attention between matters they originate and for which they receive top compensation, and those matters they “merely” service.

Fifth, the relationship partner is hopelessly conflicted in searching for the most cost-effective legal talent. This conflict only worsens during the engagement and billing process, when the relationship partner’s economic interests are in stark contrast to those of the client.

An alternate model

Ideally, counsel should be chosen solely on the basis of expertise, price, and availability. The appointment of a dedicated project manager can make this happen by having the time, experience, and independence to identify and manage legal teams and related resources without fear or favor. The likely outcomes of such a process are lower fees, a better client experience, better lawyer experience and better, faster, and cheaper outcomes. 

The centerpiece for this model is the project manager. The key attributes of the PM are less about subject matter expertise and more about independence and project management skills. Certain general counsel will have this skill set. They can be supported by robust project management tools and linked messaging channels that are inexpensive, easy to use and readily available online.

Crucially, the PM is not affiliated with a legal services provider. Or if they are, they agree not to staff the engagement from their own firm. The value of independence cannot be overstated. In-house counsel have become inured to the status quo of a relationship partner delegating work solely within the confines of their own firm. Relatedly, some general counsel are effectively captured by the firms they retain. These GCs are either alumni of a firm to which they direct future work, they aspire to be hired by the law firms they engage or both.

The PM has three major tasks: 

1. Valuate the project and determine the expertise and resources needed. Ideally, each project receives an intake review” by specialists in various practice areas to mitigate the risk of unknown unknowns.
2. Select the appropriate talent, which might not be a lawyer, based solely on expertise, price, availability and absence of conflicts, as well as other client requirements such as diversity. There are more than 100 directories of U.S. lawyers at present.
3. Manage the process using project management tools common to many other functions but rarely used by lawyers.

The “pros” of this model

Quality goes up:

• First, the pool of candidates has expanded beyond the resources of any one firm. This is true regardless of the size of the firm. The pool can now include independent counsel and those who are affiliated with boutique firms specializing in the required subject matter. Crucially, the PM can engage non-lawyers who can sometimes provide better and less expensive service than lawyers. This can be particularly true in subjects such as tax and regulatory compliance. This allows the PM to select the best available counsel regardless of their affiliation or licensure.
• Second, each lawyer earns origination credit at their respective firms. That is, they are paid at the highest rate offered by their firms. 
• Third, the compensation pressure on partners to hoard work — even if it’s outside their expertise — is mitigated.

Fees go down: 

• First, the project manager can consider fees in their selection process.
• Second, the PM can negotiate fees with each candidate.
• Third, the expanded field of candidates increases competition and creates downward pressure on fees.
• Fourth, the PM’s economic interest is unburdened by the conflict that afflicts the relationship partner whose compensation is determined by the fees they generate.
• Fifth, independent counsel (those unaffiliated with a firm), unburdened by the overhead and fee sharing of a firm, can compete for projects with lower fees.
• And last, the PM can select non-lawyer resources, such as AI, consultants and accountants.

Responsiveness goes up:

The PM will consider availability in their engagement decisions. Bottlenecks at law firms are avoided. Waiting for a particular department or lawyer to be available, something we’ve all experienced in a firm, will be mitigated.

Conflicts of interest among clients, aggravated by recent merger activity, are mitigated. The liberal conflict waivers in many engagement letters might not always serve each client’s best interests. Courts can sometimes mitigate these conflicts, but they can persist in matters where there is no court involvement.

Client goals of diversity, inclusion and equity are liberated from most law firm’s chronic inability to deliver. The PM can consider diversity in their engagement decisions. 

Other stakeholders benefit. Lawyer well-being will improve as people are able to maintain practices away from the constraints and pressures of any one firm.

The “cons” of this model

Clients may argue that their general counsel, if they have one, is already performing this role. If so, wonderful. But it is far more likely that they are using a relationship partner as a simple means of managing their legal spend.

Will there be adequate insurance coverage? If anything, a client who has engaged lawyers at multiple firms will enjoy the benefits of multiple insurance policies.

Will law firms permit their lawyers to join teams peopled with lawyers from other firms? If not, the client should ask why. In addition, would such a restriction be in violation of the relevant state’s attorney code of ethics?

Will the client find themselves entering into multiple engagement letters? Probably. But with added competition the client may finally be able to negotiate removal of some of the more egregious conflict waivers that are increasingly common, especially for the larger firms

Change can be challenging

Although the inertia of the status quo and the reluctance of firms to share work are powerful forces, this model permits clients to act in their own best interests to promote better outcomes at the most competitive prices.