Is the legal profession unusual in its reliance on untested assumptions? 

I frequently point out that lawyers implicitly assume the human document review in e-discovery is reliable so I won’t beat that already dead horse. Corporate Counsel Are Reducing Ranks of Secondary Outside Firms, Survey Reports (NLJ, 20 July 2009) reports on a survey finding that general counsels “are using fewer law firms because short-staffed corporate legal departments have little time to manage outside firms, not just because consolidating work is cheaper.”

Why do we assume that law departments manage outside counsel? Do we have evidence this is true, other than claims that it happens? At the risk of playing semantics, I suggest that inhouse counsel don’t have time to administer so many outside firms. My impression is that inhouse lawyers rarely manage outside counsel. They focus instead on the substance and strategy of a matter, not its management. Further, they are often reluctant to “micro manage” their outside counsel.

Fine, prove me wrong. All the anecdotal evidence I’ve seen supports my view. I’ve talked to inhouse counsel about requiring, for example, their outside counsel to provide budgets, prepare decision trees, or require offshore document review. Typically, their answer is “I have limited bandwidth to deal with these issues and I have to pick my battles with outside counsel carefully.”

In my post Reducing Legal Costs Beyond Tinkering with Price (14 July 2009) I wrote “law departments must actually manage inside and outside counsel, looking at how lawyers perform their work and actively seeking more efficient and effective ways to practice.”

I don’t think the current structure of law departments supports real management. GCs who actually want to manage outside counsel likely need to create a new position, someone whose job is to manage. This would acknowledge that the status quo (pre- and post-crash) has inhouse lawyers focused on case strategy and tactics, which is fine. It would add a new layer responsible for real management.

Of course, this would be a new cost. But how could it not pay for itself? For any law department spending more than a few million dollars annually on outside counsel, it’s hard to believe that active management of firms wouldn’t more than pay for the additional salary.