Nobody Loves a Lawyer
Unhappy with your lawyer? You're not alone. Most of America's largest companies ousted at least one of their outside counsel in the last 18 months, and only a third like their primary law firm well enough to recommend it to someone else, a recent survey shows.
And with attorney fees spiraling to heart-stopping new heights-corporate legal bills have nearly doubled in the last five years and law firms now pay just-out-of-school associates $160,000 a year-corporate America's bile-spitting may only get worse.
"Are people dissatisfied and firing their law firms more often than they used to? You betcha," said Susan Hackett, general counsel of Association of Corporate Counsel, whose membership represents 8,000 companies, including all of the Fortune 100. "You hear people gripe about the cost of legal services, how they gouge clients and are out of touch."
Among America's largest companies, 61 percent replaced one of their main law firms in the previous 18 months, up from 54 percent the year before, according to a 2007 report by BTI Consulting Group. The study, based on telephone interviews with top legal officers at 250 Fortune 1000 companies, also provided a forum for malcontents to vent.
"I hate it when I have to keep calling them for updated information or progress reports," the acting counsel for a software developer told the survey.
An associate general counsel at a Global 500 company fumed: "It drives me crazy when they take the attitude that they're more important. They express this by being patronizing, unresponsive. . . ."
Michael Rynowecer, president of BTI Consulting, says he has heard about "law firms providing a budget of X and then billing at five times X-which will just absolutely send clients through the roof."
The current controversy over new-associate pay "just adds fuel to the fire," says Rynowecer, whose report also advises law firms on how to improve relations.
Other research corroborates the sour mood within corporate legal departments. Last October, at the Association of Corporate Counsel's annual meeting in San Diego, about 850 attendees were asked: "Have you fired any of your law firms this year?" Pondering the question about a 10-month time frame, about a third of the chief legal officers said yes-and cited costs, poor communications, and poor quality of work as the main reasons.
In a separate study co-published last year by the Association of Corporate Counsel and Serengeti Law, a company that provides law firm billing and financial management services to in-house counsel, 56 percent of companies said in a mail survey that they had "terminated relationships with at least some of their law firms," compared to about 45 percent in years past.

Susan Hackett, general counsel of Association of Corporate Counsel, says: "Are people dissatisfied and firing their law firms more often than they used to? You betcha."
Photograph by: David Burnett / Contact Press Images
Companies typically don't sever relations with a law firm on a whim. A new legal team would require time to get to know the corporation's executives, priorities, and business concerns. During litigation or a high-stakes deal, such as an I.P.O. or corporate merger, executives are especially reluctant to switch horses midstream.
"Changing from one firm to another is difficult and expensive, but the problems may persist with a new law firm," says Rick Wolf, the former chief of global compliance for Cendant Corp. and now managing partner of Lexakos, a legal-business-consulting firm.
That's because most law firms still run on the same rigid-and in Wolf's opinion, flawed-business model of charging clients by the hour. "The only way for many law firms to raise revenues is raising billable hours, and that's an inherent tension between law firms and companies that use them."
Law firm billing rates have risen more than 5 percent every year since 2000. Some top law partners now charge $1,000 an hour. What makes corporate legal departments especially livid are the salaries law firms lavish on their newest hires-some not yet 25 years old, with no work experience and not yet licensed by the bar.
"They charge $200, $300 an hour for new associates . . . to do a memo or research a brief, and they'll spend hours on end at a computer, spinning their wheels," says Wolf, who has worked at law firms and was president of the greater New York chapter of the Association of Corporate Counsel. "Corporate counsel are asking, 'What are they doing?' They're learning on somebody else's dime."
An increasing number of corporations are now refusing to staff fresh-out-of-school lawyers on important work. They're also wising up to ways some law firms pump up billing on the sly.
"They'll send four people to a deposition when one or two are fine," said a legal officer at a large company, who asked not to be identified.
One day, the company's legal department received an odd-looking bill from the same law firm, one of the nation's largest, containing a line item for tens of thousands of dollars. "There was something about that bill that struck us as strange," the officer said. The charges turned out to be for snack food.
The corporation recently decided not to give that law firm any more work.
Of course, law firms aren't always at fault when relationships falter. When corporate executives find themselves in hot water-like those at Hewlett-Packard over the journalist-wiretapping scandal-they often blame lawyers for giving them bad advice.
Research In Motion reportedly sacked attorneys after losing its Blackberry patent trial. After ushering in different lawyers, the company still lost on appeal.
"Things go south, and fingers get pointed at outside counsel even though they're just following marching orders," says a longtime attorney who has worked at five law firms.
And hasn't the legal profession always inspired loathing and complaints?
"If you read what people were saying about lawyers in the 19th century, it's always been the same. 'Lawyers are evil scum,' " says Larry Kramer, dean of Stanford Law School and a legal historian, who believes people's dissatisfaction with lawyers may seem widespread but doesn't actually run very deep.
"But when there's trouble, they turn to lawyers," Kramer adds. "They elect lawyers to office all the time. And of course when they get into trouble, they always consult a lawyer."




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