The New Normal
Make or Buy in the Age of the Free-Agent Lawyer
Posted Oct 26, 2011 8:51 AM CDT
By Mike Evers
At all stages of a company’s life cycle, leadership continually asks the classic “Make or Buy” question. When should a company hire and develop expertise internally, and when does it make more sense to outsource tasks and purchase professional services?
When it comes to legal needs, every company has its own pressure points. Mature companies mostly tie in-house headcount to revenue metrics or benchmark against industry norms. Start-ups are more interesting to follow with respect to make or buy decisions, because their behavior usually reflects a cultural choice. Case in point, the fastest growing company in the United States, Groupon, didn’t hire its first General Counsel until June, 2011. Based on Groupon’s revenue history and the huge amount of private equity in play, that’s pretty late in the game. Given Groupon’s truly unique culture, which feeds on humor and independent thinking, I suspect that leadership was in no rush to build a law department. The need for policies and procedures does not necessarily equate to a desire for policies and procedures. Eventually, however, most $1 billion-plus companies hire at least one attorney to manage legal services delivery, and of course, many have law departments of significant size.
Indeed, Chicago-based HBR Consulting found recently that corporations are investing more these days on their in-house law departments. But don't expect these beefed-up departments to follow old normal models.
In the “New Normal,” the make or buy question expands. For companies with law departments, the objective for chief legal officers goes well beyond the old school notion of justifying additional headcount and then lobbying for it. Instead, progressive law departments are asking simply, “how can we make more in-house?” Taking more work inside does not automatically equate to hiring more attorneys. Instead, an evolving range of options are now in play.
For example, many larger law departments have developed brand new job descriptions for tech-savvy operations professionals. This is the kind of quasi-legal role envisioned by Richard Susskind in The End of Lawyers? The objective in creating this position is to incorporate large-scale cost savings via the proper use of knowledge management systems, eBilling software, content providers and more.
But I think the most important development toward the goal of doing more in-house relates to adjunct talent. The use of supplemental attorneys is developing rapidly. For years, adjunct staffing was relegated to gap-fill needs during family leave absences, or used as a clever way to end-run hiring freezes. Most commonly referred to as contract attorneys, the highest volume use of these professionals still comes during large due diligence or document review projects, often with an outside law firm supervising. But if you correlate the term contract attorney to document review work, then right now you are probably thinking about very low-paying work and attorneys with resumes that lead me, regrettably, to term these lawyers “JDs with a pulse.”
Thankfully, the New Normal is putting a new face on the contract attorney.
Here are the key developments:
The supply of really well credentialed and experienced attorneys who are available for adjunct work is staggeringly large. That presents a huge opportunity for law departments to “make more” in-house.
Recruiting firms and quasi-law firms are elegantly packaging this experience as an alternative to traditional law firm use, avoiding terms with poisonous connotations like contract attorney and temporary attorney.
Technology developments permit more robust and secure collaboration among a department’s core team of lawyers and its adjunct lawyers.
The present, and certainly the future, looks like a law department with a core team of managers, supplemented on-site and off-site by experienced attorneys who are doing an increasing amount of the heavy lifting, such as commercial contracts, regulatory compliance, patent reviews and more. To be clear, these lawyers will have @company.com email addresses. They will look and feel like members of the law department. Internal clients will not know or care about the logistics. Some adjunct staff will be paid directly by the company, either per project or hourly. Some may be part-time employees, while others will be independent contractors. Many will be payrolled via a staffing firm.
For general counsel who seek best practices advice for incorporating adjunct talent, I offer a few key “to do” items. Most importantly, connect incoming attorneys with your internal knowledge management systems, so that they can function immediately as fully contributing members of your team. Use a confidentiality agreement to mitigate any resistance to that suggestion. Make sure adjunct staff are not viewed as second class citizens within the department. Including them in departmental meetings is a helpful way to avoid that perception. If your free agent attorneys are working off-site, provide email addresses, caller ID, and calendaring systems that identify these team members with your company.
The age of the free agent lawyer is here, and companies are learning quickly how to tap into that vast pool of talent to take more work in-house.
Mike Evers is a recruiter who focuses exclusively on the needs of corporate law departments. His full service search firm includes a division that provides experienced free agent attorneys. See everscounsel.com. Mike received his JD from Duke Law School and he writes a career advice column at insidecounsel.com.
Editor's note: The New Normal is an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, Patrick Lamb, founding member of Valorem Law Group and their guests. New Normal contributors spend a lot of time thinking, writing and speaking about the changes occurring in the delivery of legal services. You're invited to join their discussion.