Webworthy News & Advice

Recently proposed IRS regulations attempt to reduce this uncertainty by spelling out the cases in which capitalization is required. The proposed regulations also favor expense deductibility more than prior rules ' especially for costs in connection with employee compensation, overhead and any hostile defense.

The Web site of New York-based Simpson Thacher & Bartlett offers a technical introduction to these proposed rules, entitled 'IRS Proposes Regulations Regarding Capitalization of Expenditures Relating to Intangible Assets.' Dated January 24, 2003, the memo was authored by D.G. Brown, J.C. Hart, S.C. Todrys and K.P. Moir. View the memo at www.stblaw.com/FSL5CS/memos/memos1518.asp#_ftn3.

Brobeck Lesson #1: Plan to Avoid Employee Termination Penalties. Financial managers whose worst-case contingencies need to cover large-scale employee terminations should investigate possible penalties and negotiate severance agreements that fairly, but realistically, address that unhappy scenario.

Some of the 400 Brobeck, Phleger & Harrison employees suddenly terminated recently have hired a prominent employment attorney to press their claims of unpaid severance and vacation pay. Brobeck's liquidation representative has offered assurances, but under California labor law a company that fails to pay employees all they are owed at the time of termination may be forced to pay them an extra 30 days of salary as a penalty.

Entitlement to severance pay is subject to terms of the severance agreement. 'If the agreement vests them with a guaranteed severance for a period of time' they would have a claim, says Brian Ashe, a partner at Seyfarth Shaw's San Francisco office. But under some agreements, the employer has the right to stop severance.

Source: 'Brobeck Staffer Hires Top Labor Attorney,' by Brenda Sandburg, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).

In the cited article, note the severe disruptive effect on the firm of the landlord's self-protective moves in anticipation of a possible bankruptcy. A careful reading of the article is also recommended for any novice reader who might underestimate the import of 'unlimited liability.'

Source: 'Property Damage,' by Renee Deger, The Recorder, 02-27-2003. Accessible online at www.law.com (registration may be required).

In a case stemming from an extortion attempt against famed legal assistant Erin Brockovich, the Los Angeles Second District Court of Appeal has held that a lawsuit for over-billing does not require a criminal defendant to allege his or her own 'actual innocence.' The ruling also refers more broadly to stating a cause of action for breach of contract, breach of fiduciary duty or fraud.

This court aimed to correct a disparity between civil litigants and criminal defendants. Civil litigants can sue their attorneys for 'unlawful conduct, double-billing, inflating hours, etc.' without regard to the merits of their cases. By contrast, criminal defendants seeking such redress have been regarded as suing for malpractice ' which under CA state law requires them to allege their own actual innocence.

Representing the criminal defense firm, Mary Bohen (a partner in L.A.'s Musick, Peeler & Garrett) predicts a flood of frivolous suits by criminal defendants. She may seek a review by the California Supreme Court.

Sources: 02-19-3003 decision by Los Angeles' Second District Court of Appeal in Bird, Marella, Boxer & Wolpert v. Superior Court (Reiner) , 03 C.D.O.S. 1491. Described in 'Guilty People Can Sue Their Attorneys Too,' by Mike McKee, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).

Route those Junk Faxes to ' Litigation? Under the 1991 Telephone Consumer Protection Act (47 U.S.C. 227), advertisers who waste your toner and tie up your fax machine without prior express invitation or permission can be sued in state court and fined $500 or more per violation.

A new Georgia case, filed by Morriss, Lober & Dobson of Macon, targets Debt Collectors International Inc. (DCI) of Mobile AL over a junk fax sent after the FCC had already censured DCI. Repeat violations can increase the statutory award to as much as $1,500 per violation.

DCI claims the junk fax prohibition is unconstitutional, citing a federal district court ruling in Missouri. But Marc B. Hershovitz, an attorney who has settled several fax cases, notes that many other courts have upheld the TCPA's constitutionality.

Source: 'Unsolicited, Faxed Ads Bring Costly Responses,' by Trisha Renaud, Fulton County Daily Report, 02-24-2003. Accessible online at www.law.com (registration may be required).

Dealings with Corporate Law Departments Increasingly Complexity. Reports about new legal surveys by Serengeti Law and Altman Weil emphasize that corporate clients continue to press for cost reductions in legal services. More clients are demanding discounts, some are reducing their use of outside counsel, some are experimenting with reverse auctions for routine legal services, and a few are even exporting legal work overseas.

While the impact of such measures on the revenues of outside firms understandably gets primary attention, a side effect of these cost-reduction methods also merits reflection. New controls and billing arrangements demanded by clients seem complex when compared with the less formal engagement procedures and the time-based billing methods predominating in recent years.

Dupont, for example, has instituted a nine-part application process that outside firms must use in explaining and financially justifying rate requests. Dupont has also confined rate adjustments to December and January; if an associate makes partner in February, the outside firm has to wait until December to apply for an increased billing rate. To work with Dupont, outside firms now need to accommodate this added procedure and constraint in their staffing plans and financial projections.

FMC Technologies Inc. is also saving money with a homegrown technique that may leave some outside counsel too baffled to even bid for legal work. For each piece of litigation work, FMC's GC defines success as a settlement based on his own estimates. He then asks outside counsel to supply target budgets (including third-party costs) for five phases: pleadings and assessment, discovery, mediation, pretrial, and trial. When a law firm's invoices for each phase come in on or under budget, the GC pays the firm 80%. The remaining 20% goes into an 'at-risk bucket.' If the outside firm goes over budget in a phase, the payment ratio flips: 80% goes into the bucket, and only 20% is paid. Ultimately, if outside counsel attains the goal set for the case, they get all the money in the bucket; they can also win substantial rewards for speed and efficiency. (For ongoing non-litigation work, FMC employs an annualized, grading-based model of the same system.)

Just as corporate clients have ample reason to experiment with methods to rationalize their expenditures on legal work, law firms have ample reason to adapt themselves to the needs and business processes of their clients. But the administrative overhead of dealing with clients would grow beyond all reason if every client firm got creative and started introducing its own unique game plan for cost cutting. One suspects that outside firms will be eating the added overhead cost of dealing with this complexity ' which will further reduce the profitability of corporate work.

Corporate counsel seem increasingly attuned to the efficiency of setting uniform policies for dealing with all a corporation's outside counsel. Outside counsel firms, conversely, have an interest in promoting more uniform procedures for doing business with their various clients.

Sources: 'Cracking the Whip,' by Catherine Aman, Corporate Counsel, February 27, 2003; 'Managing Outside Counsel,' by Rob Thomas, Legal Times, February 12, 2002; 'In-House Counsel Speak Out,' by Rob Thomas, Legal Times, February 3, 2002. All accessible online at www.law.com.

Some of the 400 Brobeck, Phleger & Harrison employees suddenly terminated recently have hired a prominent employment attorney to press their claims of unpaid severance and vacation pay. Brobeck's liquidation representative has offered assurances, but under California labor law a company that fails to pay employees all they are owed at the time of termination may be forced to pay them an extra 30 days of salary as a penalty.

Entitlement to severance pay is subject to terms of the severance agreement. 'If the agreement vests them with a guaranteed severance for a period of time' they would have a claim, says Brian Ashe, a partner at Seyfarth Shaw's San Francisco office. But under some agreements, the employer has the right to stop severance.

Source: 'Brobeck Staffer Hires Top Labor Attorney,' by Brenda Sandburg, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).Law firms can anticipate more aggressive negotiating by landlords seeking to protect their interests in the event of default.

In the cited article, note the severe disruptive effect on the firm of the landlord's self-protective moves in anticipation of a possible bankruptcy. A careful reading of the article is also recommended for any novice reader who might underestimate the import of 'unlimited liability.'

Source: 'Property Damage,' by Renee Deger, The Recorder, 02-27-2003. Accessible online at www.law.com (registration may be required).Criminal defendants face enough bars without being barred from recovering inflated legal fees.

In a case stemming from an extortion attempt against famed legal assistant Erin Brockovich, the Los Angeles Second District Court of Appeal has held that a lawsuit for over-billing does not require a criminal defendant to allege his or her own 'actual innocence.' The ruling also refers more broadly to stating a cause of action for breach of contract, breach of fiduciary duty or fraud.

This court aimed to correct a disparity between civil litigants and criminal defendants. Civil litigants can sue their attorneys for 'unlawful conduct, double-billing, inflating hours, etc.' without regard to the merits of their cases. By contrast, criminal defendants seeking such redress have been regarded as suing for malpractice ' which under CA state law requires them to allege their own actual innocence.

Representing the criminal defense firm, Mary Bohen (a partner in L.A.'s Musick, Peeler & Garrett) predicts a flood of frivolous suits by criminal defendants. She may seek a review by the California Supreme Court.

Sources: 02-19-3003 decision by Los Angeles' Second District Court of Appeal in Bird, Marella, Boxer & Wolpert v. Superior Court (Reiner), 03 C.D.O.S. 1491. Described in 'Guilty People Can Sue Their Attorneys Too,' by Mike McKee, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).Under the 1991 Telephone Consumer Protection Act (47 U.S.C. 227), advertisers who waste your toner and tie up your fax machine without prior express invitation or permission can be sued in state court and fined $500 or more per violation.

A new Georgia case, filed by Morriss, Lober & Dobson of Macon, targets Debt Collectors International Inc. (DCI) of Mobile AL over a junk fax sent after the FCC had already censured DCI. Repeat violations can increase the statutory award to as much as $1,500 per violation.

DCI claims the junk fax prohibition is unconstitutional, citing a federal district court ruling in Missouri. But Marc B. Hershovitz, an attorney who has settled several fax cases, notes that many other courts have upheld the TCPA's constitutionality.

Source: 'Unsolicited, Faxed Ads Bring Costly Responses,' by Trisha Renaud, Fulton County Daily Report, 02-24-2003. Accessible online at www.law.com (registration may be required).Reports about new legal surveys by Serengeti Law and Altman Weil emphasize that corporate clients continue to press for cost reductions in legal services. More clients are demanding discounts, some are reducing their use of outside counsel, some are experimenting with reverse auctions for routine legal services, and a few are even exporting legal work overseas.

While the impact of such measures on the revenues of outside firms understandably gets primary attention, a side effect of these cost-reduction methods also merits reflection. New controls and billing arrangements demanded by clients seem complex when compared with the less formal engagement procedures and the time-based billing methods predominating in recent years.

Dupont, for example, has instituted a nine-part application process that outside firms must use in explaining and financially justifying rate requests. Dupont has also confined rate adjustments to December and January; if an associate makes partner in February, the outside firm has to wait until December to apply for an increased billing rate. To work with Dupont, outside firms now need to accommodate this added procedure and constraint in their staffing plans and financial projections.

FMC Technologies Inc. is also saving money with a homegrown technique that may leave some outside counsel too baffled to even bid for legal work. For each piece of litigation work, FMC's GC defines success as a settlement based on his own estimates. He then asks outside counsel to supply target budgets (including third-party costs) for five phases: pleadings and assessment, discovery, mediation, pretrial, and trial. When a law firm's invoices for each phase come in on or under budget, the GC pays the firm 80%. The remaining 20% goes into an 'at-risk bucket.' If the outside firm goes over budget in a phase, the payment ratio flips: 80% goes into the bucket, and only 20% is paid. Ultimately, if outside counsel attains the goal set for the case, they get all the money in the bucket; they can also win substantial rewards for speed and efficiency. (For ongoing non-litigation work, FMC employs an annualized, grading-based model of the same system.)

Just as corporate clients have ample reason to experiment with methods to rationalize their expenditures on legal work, law firms have ample reason to adapt themselves to the needs and business processes of their clients. But the administrative overhead of dealing with clients would grow beyond all reason if every client firm got creative and started introducing its own unique game plan for cost cutting. One suspects that outside firms will be eating the added overhead cost of dealing with this complexity ' which will further reduce the profitability of corporate work.

Corporate counsel seem increasingly attuned to the efficiency of setting uniform policies for dealing with all a corporation's outside counsel. Outside counsel firms, conversely, have an interest in promoting more uniform procedures for doing business with their various clients.

Sources: 'Cracking the Whip,' by Catherine Aman, Corporate Counsel, February 27, 2003; 'Managing Outside Counsel,' by Rob Thomas, Legal Times, February 12, 2002; 'In-House Counsel Speak Out,' by Rob Thomas, Legal Times, February 3, 2002. All accessible online at www.law.com.

Deducting Expenses for Acquiring Intangible Business Assets

When acquiring a business entails expenses for creating, acquiring or enhancing intangible assets, can you deduct these expenses or must they be capitalized? Proposed IRS rules would simplify this decision and sometimes increase deductibility.

In INOPCO v. Comm'r , 503 U.S. 79 (1992), the U.S. Supreme Court required capitalization of costs that resulted in a significant 'future benefit,' even if no separate and distinct asset was created. Ever since the INOPCO decision, taxpayers have been quibbling with the IRS about what constitutes a future benefit. Also at issue has been the deductibility of certain transaction costs incurred in the acquisition of intangibles.

Recently proposed IRS regulations attempt to reduce this uncertainty by spelling out the cases in which capitalization is required. The proposed regulations also favor expense deductibility more than prior rules ' especially for costs in connection with employee compensation, overhead and any hostile defense.

The Web site of New York-based Simpson Thacher & Bartlett offers a technical introduction to these proposed rules, entitled 'IRS Proposes Regulations Regarding Capitalization of Expenditures Relating to Intangible Assets.' Dated January 24, 2003, the memo was authored by D.G. Brown, J.C. Hart, S.C. Todrys and K.P. Moir. View the memo at www.stblaw.com/FSL5CS/memos/memos1518.asp#_ftn3.

Brobeck Lesson #1: Plan to Avoid Employee Termination Penalties. Financial managers whose worst-case contingencies need to cover large-scale employee terminations should investigate possible penalties and negotiate severance agreements that fairly, but realistically, address that unhappy scenario.

Some of the 400 Brobeck, Phleger & Harrison employees suddenly terminated recently have hired a prominent employment attorney to press their claims of unpaid severance and vacation pay. Brobeck's liquidation representative has offered assurances, but under California labor law a company that fails to pay employees all they are owed at the time of termination may be forced to pay them an extra 30 days of salary as a penalty.

Entitlement to severance pay is subject to terms of the severance agreement. 'If the agreement vests them with a guaranteed severance for a period of time' they would have a claim, says Brian Ashe, a partner at Seyfarth Shaw's San Francisco office. But under some agreements, the employer has the right to stop severance.

Source: 'Brobeck Staffer Hires Top Labor Attorney,' by Brenda Sandburg, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).

In the cited article, note the severe disruptive effect on the firm of the landlord's self-protective moves in anticipation of a possible bankruptcy. A careful reading of the article is also recommended for any novice reader who might underestimate the import of 'unlimited liability.'

Source: 'Property Damage,' by Renee Deger, The Recorder, 02-27-2003. Accessible online at www.law.com (registration may be required).

In a case stemming from an extortion attempt against famed legal assistant Erin Brockovich, the Los Angeles Second District Court of Appeal has held that a lawsuit for over-billing does not require a criminal defendant to allege his or her own 'actual innocence.' The ruling also refers more broadly to stating a cause of action for breach of contract, breach of fiduciary duty or fraud.

This court aimed to correct a disparity between civil litigants and criminal defendants. Civil litigants can sue their attorneys for 'unlawful conduct, double-billing, inflating hours, etc.' without regard to the merits of their cases. By contrast, criminal defendants seeking such redress have been regarded as suing for malpractice ' which under CA state law requires them to allege their own actual innocence.

Representing the criminal defense firm, Mary Bohen (a partner in L.A.'s Musick, Peeler & Garrett) predicts a flood of frivolous suits by criminal defendants. She may seek a review by the California Supreme Court.

Sources: 02-19-3003 decision by Los Angeles' Second District Court of Appeal in Bird, Marella, Boxer & Wolpert v. Superior Court (Reiner) , 03 C.D.O.S. 1491. Described in 'Guilty People Can Sue Their Attorneys Too,' by Mike McKee, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).

Route those Junk Faxes to ' Litigation? Under the 1991 Telephone Consumer Protection Act (47 U.S.C. 227), advertisers who waste your toner and tie up your fax machine without prior express invitation or permission can be sued in state court and fined $500 or more per violation.

A new Georgia case, filed by Morriss, Lober & Dobson of Macon, targets Debt Collectors International Inc. (DCI) of Mobile AL over a junk fax sent after the FCC had already censured DCI. Repeat violations can increase the statutory award to as much as $1,500 per violation.

DCI claims the junk fax prohibition is unconstitutional, citing a federal district court ruling in Missouri. But Marc B. Hershovitz, an attorney who has settled several fax cases, notes that many other courts have upheld the TCPA's constitutionality.

Source: 'Unsolicited, Faxed Ads Bring Costly Responses,' by Trisha Renaud, Fulton County Daily Report, 02-24-2003. Accessible online at www.law.com (registration may be required).

Dealings with Corporate Law Departments Increasingly Complexity. Reports about new legal surveys by Serengeti Law and Altman Weil emphasize that corporate clients continue to press for cost reductions in legal services. More clients are demanding discounts, some are reducing their use of outside counsel, some are experimenting with reverse auctions for routine legal services, and a few are even exporting legal work overseas.

While the impact of such measures on the revenues of outside firms understandably gets primary attention, a side effect of these cost-reduction methods also merits reflection. New controls and billing arrangements demanded by clients seem complex when compared with the less formal engagement procedures and the time-based billing methods predominating in recent years.

Dupont, for example, has instituted a nine-part application process that outside firms must use in explaining and financially justifying rate requests. Dupont has also confined rate adjustments to December and January; if an associate makes partner in February, the outside firm has to wait until December to apply for an increased billing rate. To work with Dupont, outside firms now need to accommodate this added procedure and constraint in their staffing plans and financial projections.

FMC Technologies Inc. is also saving money with a homegrown technique that may leave some outside counsel too baffled to even bid for legal work. For each piece of litigation work, FMC's GC defines success as a settlement based on his own estimates. He then asks outside counsel to supply target budgets (including third-party costs) for five phases: pleadings and assessment, discovery, mediation, pretrial, and trial. When a law firm's invoices for each phase come in on or under budget, the GC pays the firm 80%. The remaining 20% goes into an 'at-risk bucket.' If the outside firm goes over budget in a phase, the payment ratio flips: 80% goes into the bucket, and only 20% is paid. Ultimately, if outside counsel attains the goal set for the case, they get all the money in the bucket; they can also win substantial rewards for speed and efficiency. (For ongoing non-litigation work, FMC employs an annualized, grading-based model of the same system.)

Just as corporate clients have ample reason to experiment with methods to rationalize their expenditures on legal work, law firms have ample reason to adapt themselves to the needs and business processes of their clients. But the administrative overhead of dealing with clients would grow beyond all reason if every client firm got creative and started introducing its own unique game plan for cost cutting. One suspects that outside firms will be eating the added overhead cost of dealing with this complexity ' which will further reduce the profitability of corporate work.

Corporate counsel seem increasingly attuned to the efficiency of setting uniform policies for dealing with all a corporation's outside counsel. Outside counsel firms, conversely, have an interest in promoting more uniform procedures for doing business with their various clients.

Sources: 'Cracking the Whip,' by Catherine Aman, Corporate Counsel, February 27, 2003; 'Managing Outside Counsel,' by Rob Thomas, Legal Times, February 12, 2002; 'In-House Counsel Speak Out,' by Rob Thomas, Legal Times, February 3, 2002. All accessible online at www.law.com.

Some of the 400 Brobeck, Phleger & Harrison employees suddenly terminated recently have hired a prominent employment attorney to press their claims of unpaid severance and vacation pay. Brobeck's liquidation representative has offered assurances, but under California labor law a company that fails to pay employees all they are owed at the time of termination may be forced to pay them an extra 30 days of salary as a penalty.

Entitlement to severance pay is subject to terms of the severance agreement. 'If the agreement vests them with a guaranteed severance for a period of time' they would have a claim, says Brian Ashe, a partner at Seyfarth Shaw's San Francisco office. But under some agreements, the employer has the right to stop severance.

Source: 'Brobeck Staffer Hires Top Labor Attorney,' by Brenda Sandburg, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).Law firms can anticipate more aggressive negotiating by landlords seeking to protect their interests in the event of default.

In the cited article, note the severe disruptive effect on the firm of the landlord's self-protective moves in anticipation of a possible bankruptcy. A careful reading of the article is also recommended for any novice reader who might underestimate the import of 'unlimited liability.'

Source: 'Property Damage,' by Renee Deger, The Recorder, 02-27-2003. Accessible online at www.law.com (registration may be required).Criminal defendants face enough bars without being barred from recovering inflated legal fees.

In a case stemming from an extortion attempt against famed legal assistant Erin Brockovich, the Los Angeles Second District Court of Appeal has held that a lawsuit for over-billing does not require a criminal defendant to allege his or her own 'actual innocence.' The ruling also refers more broadly to stating a cause of action for breach of contract, breach of fiduciary duty or fraud.

This court aimed to correct a disparity between civil litigants and criminal defendants. Civil litigants can sue their attorneys for 'unlawful conduct, double-billing, inflating hours, etc.' without regard to the merits of their cases. By contrast, criminal defendants seeking such redress have been regarded as suing for malpractice ' which under CA state law requires them to allege their own actual innocence.

Representing the criminal defense firm, Mary Bohen (a partner in L.A.'s Musick, Peeler & Garrett) predicts a flood of frivolous suits by criminal defendants. She may seek a review by the California Supreme Court.

Sources: 02-19-3003 decision by Los Angeles' Second District Court of Appeal in Bird, Marella, Boxer & Wolpert v. Superior Court (Reiner) , 03 C.D.O.S. 1491. Described in 'Guilty People Can Sue Their Attorneys Too,' by Mike McKee, The Recorder, 02-21-2003. Accessible online at www.law.com (registration may be required).Under the 1991 Telephone Consumer Protection Act (47 U.S.C. 227), advertisers who waste your toner and tie up your fax machine without prior express invitation or permission can be sued in state court and fined $500 or more per violation.

A new Georgia case, filed by Morriss, Lober & Dobson of Macon, targets Debt Collectors International Inc. (DCI) of Mobile AL over a junk fax sent after the FCC had already censured DCI. Repeat violations can increase the statutory award to as much as $1,500 per violation.

DCI claims the junk fax prohibition is unconstitutional, citing a federal district court ruling in Missouri. But Marc B. Hershovitz, an attorney who has settled several fax cases, notes that many other courts have upheld the TCPA's constitutionality.

Source: 'Unsolicited, Faxed Ads Bring Costly Responses,' by Trisha Renaud, Fulton County Daily Report, 02-24-2003. Accessible online at www.law.com (registration may be required).Reports about new legal surveys by Serengeti Law and Altman Weil emphasize that corporate clients continue to press for cost reductions in legal services. More clients are demanding discounts, some are reducing their use of outside counsel, some are experimenting with reverse auctions for routine legal services, and a few are even exporting legal work overseas.

While the impact of such measures on the revenues of outside firms understandably gets primary attention, a side effect of these cost-reduction methods also merits reflection. New controls and billing arrangements demanded by clients seem complex when compared with the less formal engagement procedures and the time-based billing methods predominating in recent years.

Dupont, for example, has instituted a nine-part application process that outside firms must use in explaining and financially justifying rate requests. Dupont has also confined rate adjustments to December and January; if an associate makes partner in February, the outside firm has to wait until December to apply for an increased billing rate. To work with Dupont, outside firms now need to accommodate this added procedure and constraint in their staffing plans and financial projections.

FMC Technologies Inc. is also saving money with a homegrown technique that may leave some outside counsel too baffled to even bid for legal work. For each piece of litigation work, FMC's GC defines success as a settlement based on his own estimates. He then asks outside counsel to supply target budgets (including third-party costs) for five phases: pleadings and assessment, discovery, mediation, pretrial, and trial. When a law firm's invoices for each phase come in on or under budget, the GC pays the firm 80%. The remaining 20% goes into an 'at-risk bucket.' If the outside firm goes over budget in a phase, the payment ratio flips: 80% goes into the bucket, and only 20% is paid. Ultimately, if outside counsel attains the goal set for the case, they get all the money in the bucket; they can also win substantial rewards for speed and efficiency. (For ongoing non-litigation work, FMC employs an annualized, grading-based model of the same system.)

Just as corporate clients have ample reason to experiment with methods to rationalize their expenditures on legal work, law firms have ample reason to adapt themselves to the needs and business processes of their clients. But the administrative overhead of dealing with clients would grow beyond all reason if every client firm got creative and started introducing its own unique game plan for cost cutting. One suspects that outside firms will be eating the added overhead cost of dealing with this complexity ' which will further reduce the profitability of corporate work.

Corporate counsel seem increasingly attuned to the efficiency of setting uniform policies for dealing with all a corporation's outside counsel. Outside counsel firms, conversely, have an interest in promoting more uniform procedures for doing business with their various clients.

Sources: 'Cracking the Whip,' by Catherine Aman, Corporate Counsel, February 27, 2003; 'Managing Outside Counsel,' by Rob Thomas, Legal Times, February 12, 2002; 'In-House Counsel Speak Out,' by Rob Thomas, Legal Times, February 3, 2002. All accessible online at www.law.com.