31 August 2009

In-house counsel briefing out

In an interesting interview by Law.com of Ken Massaroni, General Counsel at Seagate, Massaroni says:

Q: Other than IP litigation, what other kinds of matters do you typically send to outside counsel?

A: Pretty much all of our litigation -- including HR matters and commercial contract disputes -- goes to outside counsel.

Q: Approximately how big is Seagate's corporate law department? Has there been a recent trend in terms of either reducing or expanding the size of the law department?

A: Our department numbers approximately 50, including both lawyers and non-lawyer staff. Seagate has recently gone through some reductions, and the legal department was affected by that.

Q: What kinds of matters that you deal with are more efficiently and effectively handled in-house rather than by outside counsel?

A: There are a whole host of activities that I think are better handled by inside attorneys and that are also accomplished on a more cost-efficient basis. Those would include all of the counseling on HR matters, all general corporate matters and the negotiation of commercial contracts, to name just a few. These are the kinds of things where inside attorneys can work closely with our clients to the point where we understand the issues to a degree that would be impossible for outside counsel to achieve on anything like a cost-effective basis.

I see several reasons for briefing out:
  • too much work and not enough lawyers
  • insufficient expertise internally
  • doing the work would be a poor utilisation of in-house lawyers
In-house counsel are uniquely placed to spend time getting to know the company's real business. Law firms will tell you they can do the same thing, but they can't. It follows that in-house counsel should do the work that requires that intimate knowledge, and it's only the other work that might be a candidate to send out.

Briefing out litigation is a good example of the last point - litigation is rarely part of core business (even if you're an insurance company) and your in-house lawyers have been hired on the basis of how they fit core business needs.

Litigation is also an example of the second point - a property company doesn't need to employ experienced litigators, because litigation is (hopefully) infrequent.

As for the first point, it seems that many large organsiations brief out about 60% of their legal work. That implies that the working hours of in-house lawyers are largely of their own choosing, since they could easily double their workload (and hours) and still not get all the legal work done. Therefore an in-house lawyer needs to decide what is an appropriate workload for his or her life.