As the cost of outside counsel has risen, businesses have brought an increasing amount of work in-house. This creates significant efficiencies for them. It allows for better utilization of in-house and contract attorneys (onshore and offshore), more use of nonattorney professionals, and enhanced sharing of knowledge and information. This trend has allowed businesses to practice across multiple jurisdictions, and to streamline processes for recurring activities using Six Sigma and other techniques. These efficiencies have improved quality and also reduced costs for repetitive processes, such as contracting, closings, and regulatory filings, that are handled in-house. By paying in-house attorneys on a salary basis, businesses already have the benefits of results-based fixed fees for these services.
What businesses don’t have is much success in establishing fixed-fee arrangements with their outside counsel, despite years of discussions, conferences, and articles. I believe the greatest obstacle to such arrangements has been an asymmetry of information between the buyer and seller—the disparity between what firms know about the true cost of the legal services they provide and what the clients know.
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