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Compliance Issues Are Top Concern of In-house Counsel, Outside Firms Held to Higher StandardsACC and Serengeti Release Sixth Annual Managing Outside Counsel SurveySan Diego, CA — October 23, 2006 — For the second year in a row, outside counsel named “keeping track of company activities that might have legal implications” as their top concern (cited by 86 % of respondents), pushing past the previous top concern of “controlling outside legal costs.” This change in priorities reflects in-house counsel’s recognition that increased regulation, compliance reporting requirements, and scrutiny by regulators and other stakeholders means that they must be more diligent than ever in closely monitoring all of their client’s activities. In-house counsel play a central role in identifying legal and regulatory risks and assuring that they are appropriately addressed. These and other significant developments in the relationships between in-house and outside counsel are analyzed in the 2006 “ACC/Serengeti Managing Outside Counsel Survey Report,” a collaboration between the Association of Corporate Counsel (ACC) and Serengeti Law, released at ACC’s Annual Meeting, October 23, in San Diego. “In-house counsel’s role has grown dramatically in the post-Enron era, as companies strive to meet new and constantly evolving compliance requirements,” explained Frederick J. Krebs, president of ACC. “At the same time, they have continued to focus on getting the best from their outside counsel partners and are holding them accountable when they fail.” Greater Control Over Outside Counsel While some have criticized in-house counsel for their reliance on outside firms, in fact they hold outside partners to high standards. In-house counsel are more likely than ever to take action against underperforming firms, with 55 percent of survey respondents saying that they terminated relationships with at least one of their law firms in 2005. Top reasons for firing firms remained consistent with previous years, including poor quality of work/results (69%), lack of responsiveness (66%), and too high fees/costs (62%). And “personality issues” are on the rise, cited by 48 percent of in-house counsel as the reason for terminating a firm (v. 37% in 2004, 16% in 2003). In addition, in-house lawyers have increased their insistence on a number of terms when retaining outside firms, including monthly billing (94%), defined billing formats/details (67%), and no changes to assigned lawyers without approval (61%). Many plan to institute additional terms including specific technology requirements (20%), end of matter assessments (18%), and adherence to diversity policies (18%). Three-quarters of in-house counsel require budgets for at least some of the matters being handled by outside counsel and continue to increase the percentage of matters for which they require budgets (49 percent of matters in 2005 compared to 38 percent in 2001). Technology to Handle More Work, Meet New Requirements In-house counsel have actively met new compliance requirements through the expanded use of technology. For the first time, Web-based matter management and e-billing systems (systems that connect law departments to their outside counsel) have overtaken the use of internal systems, with over 21 percent of in-house counsel reporting that they use these systems, and another 25 percent stating that they plan to. Use of internally developed spreadsheets and databases, while still common, has declined to 33 percent of respondents (down from 36% last year). Use of internal software tracking programs has also declined (from 22% in 2004 to 14% in 2005). “Each year we see law departments becoming more sophisticated in the ways that they manage their legal work,” said Serengeti’s Rob Thomas, author of the annual survey report. “New demands on law departments are driving them to re-define their relationships with their firms, and to put better systems in place to track legal exposure, spending, and results.” The survey also gathered data on law firm hourly rates in eighteen major metropolitan areas and across thirteen areas of legal practice. For more information, please contact David Barre on-site at the ACC annual meeting at 202.256.4042. For a copy of the Executive Summary (available to members of the press), please contact Joe Lontos at lontos@acca.com. ACC’s annual meeting is the premier gathering of in-house counsel, drawing more than 2,800 participants. About the Survey The 175+ page survey report is available on CD from Serengeti (order form available at: www.serengetilaw.com). Additional background information can be obtained from the author, Rob Thomas at Serengeti (contact information above). About ACC The Association of Corporate Counsel is the in-house bar associationSM, serving the professional needs of attorneys who practice in the legal departments of corporations and other private sector organizations worldwide. The association promotes the common interests of its members, contributes to their continuing education, seeks to improve understanding of the role of in-house attorneys, and encourages advancements in standards of corporate legal practice. Since its founding in 1982, the association has grown to 20,000 members in more than 55 countries who represent over 8,000 corporations. ACC has 47 chapters and 14 committees serving the membership. Its members represent all of the Fortune 100 companies. Internationally, its members represent 42 of the Global 50 and 74 of the Global 100 companies. For more information, go to www.acca.com. About Serengeti Serengeti Law provides Serengeti Tracker®, the highest-rated and most widely used system for both electronic billing and matter management in recent surveys of both law departments and law firms. Tracker® includes electronic bill auditing, online document and contract management, automated budget management, and performance tracking. In-house counsel quickly generate customized management reports to analyze spending, track budgets, assess developing areas of exposure, and compare results. With only an Internet connection and an hour of training, one-lawyer law departments up to the Fortune 50 work online with all of their outside counsel, including nearly 10,000 law firm offices in more than 125 countries worldwide. More information is available at: www.serengetilaw.com. |
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