Companies look to legal departments for belt tightening - Washington Business Journal:

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While this axiom sometimesa wields thepersonnel ax, it also forcexs businesses to rethink weak strategies and questionb long-standing norms across the organization. As chief financial officerss scan their operating budgets looking for places to one department oftenstands out: legal. Most mediuk and large businesseshave in-housre lawyers. One of their key jobs is hirinfg and managing all the outside legal work done on behalg ofthe company, which can be painfully Companies might shell out $200 to as much as $800 per hour to elite law firms for matters that can take hundreds of billablee hours.
Amid the budgegt squeeze, corporate counsels are looking for lessexpensive alternatives, whichh is driving significant changes in the way legall work is done and how lawyers get paid for it. Corporate counsels are often a company’s analyzing all transactions and business practice s through the lens oflegal “In-house lawyers are able to wed an in-depthg knowledge of a particular businesws with the nuances of law,” said Manikj Rath, president of the and general counsel of McLean-based .
“An outside lawyer will only give you generakllegal expertise, not great knowledge of your In-house counsels are often generalists hired to do the nuts-and-boltxs legal work at company. For a real estate business mighthave in-house lawyers handling property transactions and buildingy licensing. This can save companies a bundle inlegalo fees. “When you hire an in-house you’re paying for an open bar. With outside you’re buying by the drink,” Rath explained. When somethingv more specializedand time-consuming comes up, such as litigation, a majorf acquisition or an employment law matter, corporate counsels will typicallh farm it out to a law firm.
“Thesee things require a lot of bandwidth,” Rath “You don’t want your in-house lawyerse to get tied down in the minutiaa of litigation when they shouls be focused on your Some industries, such as governmenty contracting, have not been dramatically affected by the recession. But other such as financial services, have been pummeled by the downturn and are clamping downon spending. For at Reston-based student loan provider , fourth-quarter total operatingh expenses weredown 41.3 percent over a year earlier, as a percentag of assets.
McLean-based mortgage gianty , which has not yet releasede fourth-quarter earnings, reported that third-quarter administrative expensesdroppes 13.1 percent over a year earlier, as a percentager of assets. ’s fourth-quarte operating expenses fell 15.5 percent, as a percentage of While legal departments are almost certainlyu a part of thisbudgetary squeeze, it is hard to say just how they are affectecd because none of those companies would agre to be interviewed for this story. McLean-based Capitapl One did, however, furnish an e-maile d statement from Steve Gannon, deputy general about the company’s reduction in expenses for outsidelegal counsel.
The company has, amontg other things, “recently begun utilizing alternative billing arrangements such as flat fees insteadx ofhourly rates, and limited biddiny processes for certain work,” he This strategy is becoming more common, and it is driving some long-awaites changes in the way law firms operate, said Willia Brennan, a law firm consultanrt with in Newton Square, Pa. “For the first time in 20 there’s actually an implementation of new billiny methods other than the very much malignedhourlh method,” he said.
It is becoming more commom for law firms to get paid withfixede fees, retainers and success fees basefd on the value renderex by the law firm, Brennan