ANALYSIS: What Do In-House Counsel Want From Law Firms?

Sept. 23, 2020, 6:51 PM

What is it that corporate counsel most want in their choice of external counsel to help handle commercial deals?

Turns out, almost nine of out 10 in-house attorneys said that subject matter expertise is a key reason to hire outside lawyers in the transactional context, based on results from Bloomberg Law’s Commercial Deal Insights 2020 survey.

And how do corporate counsel feel about the performance of their hired guns? Generally, they’re pleased. They told us that law firms are spending about the right amount of time on their drafting assignments, indicating that firms are allocating their time and resources in the right ways.

Throughout 2020, Bloomberg Law has been surveying law firm and in-house attorneys about their deal experiences. The results reported here represent 135 responses from in-house counsel in April and May concerning the drafting process for a range of commercial transactions engagements.

Seeking Expertise & Technical Knowledge

Expertise factored into two of the top three reasons our corporate counsel respondents gave for hiring outside lawyers. The top reason, “need for subject matter expertise,” resonated with 89% of our respondents. And the third-most-cited reason, “technical complexity,” at 44%, generally echoes that same sentiment.

These responses align with the notion that law firms are providing specialized transactional experience and expertise that an in-house counsel might not be at liberty to develop.

More than half of respondents (54%) noted that “internal workload, bandwidth, or staffing issues” prompted looking to outside counsel.

Notably, the size and significance of the contract were chosen less often as reasons for engaging outside counsel (21% and 33%, respectively), which may indicate that corporations are comfortable keeping the drafting of general commercial transactions provisions in-house unless they are resource-strapped or in need of specific expertise. And it may also indicate that exceptionally large or important transactions are not that common.

Are Law Firms Doing a Good Job?

A key performance measure for deal lawyers is whether they are allocating the right amount of time to different deal-related issues. One way to gauge that performance is whether corporate counsel feel that their drafting efforts are allocated to the right areas. In our survey, we discovered that, by this measure, law firms are getting good marks: Respondents said they are generally spending the right amount of time drafting contract provisions in their work for corporate counsel.

Is agreement between in-house attorneys and their outside counsel surprising? There is a common perception — or misperception — that in-house attorneys and their outside counsel tend to battle over the drafting of some deal provisions; however, more than three-quarters of in-house attorneys said the time spent drafting provisions was about right. This indicates that even if the provision is highly negotiated, in-house counsel feel that outside counsel are spending the appropriate amount of time and resources on the job.

Bloomberg Law is currently fielding a survey specifically around the M&A process. We’d love your insights: Click here to participate. The M&A Insights 2020 Survey closes this Friday, Sept. 25.

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