Making the Grade

It's an irresistible force colliding with an immovable object: Laws firms under pressure to make more money butt up against general counsel locked into budgets that won't bend.

Such a clash inevitably fractures even a strong relationship, and the results of InsideCounsel's 18th Annual Survey of General Counsel reflect that. While you still give your law firms a solid B for overall performance, your answers reflect a growing resentment over rising fees. For example, nearly 60 percent of you think law firm rate increases are excessive and that associate pay is too high.

"When I talk to law firms, I have one hand on my wallet," says William B. Solomon Jr., general counsel of GMAC. "With the pressure on firms to increase revenues, they don't care very much about cost effectiveness."

Not surprisingly, law firm attorneys have a different view. They overwhelmingly disagree that their firms make too much money and say they're working to hold down fees.

These and other results of our survey, which appear on the following pages, suggest that a new paradigm for the in-house-outside counsel relationship is overdue. Some general counsel think law firms need to share the risk and seek creative alternatives to the hourly rate. So far, there is little evidence that most firms are ready for that.

Click here for the complete results.

Senior Editor

Mary Swanton

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