In-House Counsel

Converge if you don?t increase your average firm size and you get volume discounts

By Rees Morrison

For years I supported convergence, but my enthusiasm has waned lately. Inevitably, larger firms remain after a pruning and they charge higher billing rates (See my post of Jan. 3, 2007: increased rates with firm size.). In addition, with electronic billing, the administrative hassle of dealing with scores or hundreds of law firms has shrunk considerably. The measure is not total numbers of law firms used by a department but how many an individual in-house lawyer can effectively oversee. At the lawyer level, numbers of matters counts for more than numbers of firms.

My latest thought is to urge law departments to reduce the number of law firms they retain so long as they maintain their pre-convergence, average firm size.

In a further divergence from my former opposition to discounting, the department that converges should obtain appropriate volume-related discounts. Insisting on discounts of 5 percent should be relatively straightforward; 7.5 percent seems about standard for $500,000 of fees; 10 percent at $1 million; and 12.5 percent or more at $2 million and higher.

Full post as published by Law Department Management on November 21, 2008 (boomark / email).