The need for pro-active management by in-house lawyers

Virtually any effort represents value. That holds true for effort in the legal profession as much as it does in other fields.

In-house counsel who work with outside service providers – and even with their in-house associates – need to consider how the value of the effort expended on behalf of their companies relates to the cost of that effort. Whereas outside lawyers tend to view the “quality” of their work in isolation from its cost, that cost represents for in-house lawyers at their client companies an inherent and integral element of the quality. In the apochryphal example, spending $100,000 to defend against a claim that represents at most a $20,000 liability would be foolish to an in-house attorney because the cost of the effort outweighs the risk of doing nothing.

The role of the in-house attorney, then, often comes down to assuring that his or her employer receives effort the cost of which to the company is well calibrated to the value that the effort represents or delivers to the company. This often requires that the in-house attorney manage that effort to assure that the cost remains within a range close to (if not below) the value of that service. That this requires pro-active effort on the part of the in-house attorneys is reflected in a question posed by Ben Heineman, former General Counsel of General Electric Company, in an article several years ago when discussing the trend toward global “mega firms”: “Ultimately, the question for in-house law departments is this: Do they want to manage their global matters, or do they want to cede management to outside counsel?”