•;Upper-left corner. Matters with high risk potential but without significant strategic advantage are
better handled by well-qualified outside experts, since they are not likely to move the company
forward in its strategic plan. FSA investigations or major litigation, for example, may require a
degree of expertise and have a high risk potential, but because they are related to past history, they
are not always related to the company’s current business objectives and strategy.
The exception would be high-risk issues that could damage reputation.
•;Lower-left corner. Finally, matters with low risk potential and low strategic value should be
eliminated or reduced, automated, performed by others in the company, or outsourced. For
example, simple human resources matters, such as background checks, do not need to be
performed by the legal department.
TIP: Scoping facilitates the negotiation, development and implementation of Value-Based
Fees, such as flat fees and retainers (whether or not combined with success fees.) Scope a matter
or project carefully as part of the planning stage include who will do what, how much effort
they will put into it, and what they will deliver. Developing the budget carefully will aid the
negotiation process because it helps both the law department and outside counsel clarify the
cost and the value of the work.
6 C. Basic practices in managing higher-value outside counsel relationships
Define what you hope to accomplish
What are your main goals in partnering more effectively with outside counsel?
•;Better outcomes by having a more knowledgeable team in place when matters arise
•;Stronger work relationships with highly-motivated firms who already know your company,
in-house legal team and operating procedures
•;Improved preventative law efforts by teaming up with outside counsel proactively to better
advise the business on how to mitigate risk (not just address issues after they arise)
•;Reduced administrative burdens by training counsel up front on your operating procedures
(e.g., billing guidelines), reducing the amount of time you have to spend correcting things
later
•;Greater efficiency and cost savings - from more effective fee structures when client and firm
trust one another enough to commit to risk-sharing and value-based fee models that eschew
the hourly rate approach
