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Can Outside and In-House Counsel Be Partners?

Can law firms create a working partnership with their peers in-house?  That's the topic of discussion over at the Association of Corporate Counsel's In-House Blog.  The discussion originated with an article by Larry Salibra that appeared in the April 2008 issue of the ACC publication (not online) that took the position that corporate law departments cannot establish effective partnerships with law firms.  In a follow-up blog post, Steve Bokat took issue with Salibra's piece, arguing that while forging relationships between in-house and outside counsel might be difficult, it is not merely feasible, but also mutually beneficial for both parties.  Bokat argues that a relationship gives a law firm a steady stream of guaranteed work, while the corporation benefits through lower rates and access to lawyers who understand the history of the company and are familiar with its executives.

But Salibra remained unpersuaded.  In a blog post entitled "What About the Lose-Lose Part?," Salibra argues that outside firms and corporations cannot, by definition form a partnership, because "the classic notion of a partnership requires not only sharing the profits, but also sharing the losses." However, that is where the notion of a partnership breaks down:

Most in-house counsel would not embrace the notion that when the outside counsel goes they go as well. In fact none of the ACC participants who described this notion of a partnership even hinted at such a close connection. House counsel’s reward system and objectives are inherently inconsistent with the outside legal service provider. Their compensation should go up when the outside firm’s goes down either because they are providing more cost effective services in-house or they have become more effective in eliminating the need for costly outside services. When we eliminated what was becoming an epidemic of claims under the “scaffolding law” provision of the New York labor law by trying cases to verdict, and winning a sufficient number to make contingency litigation uneconomic, my compensation was not threatened, in fact my compensation went up and would continue higher to extent that our plant operations were less costly. If an outside, firm had done the same thing they would have to replace that stream of lucrative income with the same or larger source, and such replacement is not a realistic expectation. Trying to construct a win-win in this case is simply not possible.

Do you believe that corporate counsel should regard their relationship with outside counsel as a partnership -- or vice versa?  Send us your comments below.

Posted by Carolyn Elefant on April 22, 2008 at 04:35 PM | Permalink | Comments (0)

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