Pressures on legal departments to become ever more efficient in a complex and demanding business and legal environment have led legal departments to look for innovative ways to save money. One cutting-edge way to reduce costs is to disaggregate and “right size” the more complex tasks with the use of a range of new resources — new technology, new human capital and new knowledge capital. This effort to connect the right resources to the right problem and integrate the efforts of different specialized resources into a coherent whole poses a new and interesting challenge for in-house legal departments.
Under the old model, general counsel kept headcount down by relying on outside counsel to manage talent and have the expertise to deal with anything outside of in-house core competencies. Law firms, in turn, bulked up in size and breadth of capabilities in an effort to become their clients’ go-to firm for most matters. As firms expanded the range of specialties they covered, and also increased their hourly rates for each specialty, the consequences were predictable: To find the necessary capabilities at the right price point, in-house counsel moved away from one-stop shopping at high-priced firms and developed relationships with a much larger number of firms. Nonetheless, outside legal spend continued to rise dramatically as companies tried to control fixed costs while dealing with an increasingly complex legal environment. The net result is not sustainable; it is simply not an efficient solution and contrary to how every other function in a modern corporation works.
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