Many law departments hire outside counsel at “discounted” rates without determining the major tasks expected, the amount of hours to complete the work, the appropriate level of resource performing the work, and possible events that could change the legal work plan. We have seen numerous examples, when comparing similar matters, where the total cost of matters with discounted rates were higher than those with non-discounted rates. Focusing on rates alone, without controlling hours, does not lead to cost savings or containment as the formula for total cost of a matter based on hourly fee matters = (rates) x (hours).
This article continues the series on how a general counsel can create and foster a law department culture that excels in the business of practicing law. Matter-level budgeting is one of the most important components of outside counsel management cost containment.