Last week, a view of the prospect of GCs sending more business to outside counsel.
This week, a gentle reminder that law firms cannot take anything for granted.
UK publication Legal Director sees an interesting trend of in-house counsel taking on work, instead of handing it off to outside counsel. This is not just on routine commodity-type work, but also on key strategic transactions. Reporter Ed Thornton provides a detailed review, starting with a large outsourcing contract recently completed between BOC Group and Marks & Spencer.
Note this observation from BOC senior counsel Andrew Brackfield:
“As business lawyers, we aim to know the business really well and provide a service,” says Brackfield. “Economically, it makes sense to do as much in house [as possible].”
Another deal involved BT Group, which did a large outsourcing deal with Reuters. Kimon de Ridder, senior legal counsel for BT, gives perhaps the best reason of all for handling it in-house:
“After all, we, as an in-house function, are the ones who are principally called to account by our board for all legal actions and costs, as well as decisions taken.”
I find it interesting that both deals highlighted involved outsourcing, but the company lawyers were insourcing legal work.
Does this all add up? BOC’s Mr. Brackfield has apparently done the math:
“If you did a calculation about how much it costs to employ in-house and external firms, in-house is significantly cheaper. We are good value from that point of view.”
What metrics could Mr. Brackfield use to validate these calculations? Well, try the lagging indicator of large firm associate bonuses.
That said, if I owned a bar in Manhattan or LA, I’d double-up on the Grey Goose order.
Update (27 Jan 06): More from Legal Director.