In-house counsels limiting use of outside attorneys

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ST. LOUIS — Carly Duvall Le Riche has worked as an in-house counselor for startups for more than four years, and during that time she has noticed that attorneys in similar roles seem to be doing more legal work internally rather than shifting it to outside counsel.

Duvall Le Riche, who has worked for the startups Cariloop and TreviPay, is not the only one who has seen that change.

In a 2024 report from Thompson Reuters, 69% of general counselors reported that they were facing “moderate to significant cost pressure” from their business leaders.

“The role of the general counsel or the chief legal officer has expanded over time in that the individuals who hold that title tend to have a broader background, so they can do more of the everyday work for a legal department than perhaps they could in the past,” Duvall Le Riche said. “I still think there’s plenty of work going to outside firms — and I think there will continue to be — it’s just that the types of questions that may be asked of outside counsel has changed and shifted slightly.”

John Schierholz, vice president and general counsel for Duke Manufacturing, attributes the increase pressure on in-house attorneys to the “ever-present push on the part of companies to find cost savings,” he said.

“They are trying to find wherever they can to hold costs down,” Schierholz said. “In particular when it’s a department which is strictly overhead and isn’t responsible for generating income, it’s an easy target to say, ‘Well, we can cut that.’”

In addition to an increasing pressure on “budget consciousness,” Duvall Le Riche thinks that companies need their internal legal teams to do more because of changes in privacy laws and increased globalization.

There is now an “expectation that in-house counsel have a varied skill set in order to be successful,” she said.

To limit the use of outside counsel, Duvall Le Riche pays close attention to internal legal projects.

“If I can stay organized, communicate well with my internal teams and understand what the needs are, it reduces the need to go outside,” she said.

Michael Miller, chief operating officer and general counsel for Mid-Missouri Bank, also said that part of his job is to limit outside counsel costs as much as possible.

“I have to be very realistic about what my abilities and time restrictions are and certainly try to maximize both of those without putting the bank in a situation where we should have done or could have done better had I used outside counsel,” Miller said.

Sometimes the investment in outside counsel is worth it, he added.

For example, in March, the bank was working on adjusting a retirement plan for employees. Miller needed to make sure that those changes complied with the Employee Retirement Income Security Act and other labor regulations.

“That is well outside my wheelhouse or my skill level, so as we move forward with our review and analysis of that project, I will be seeking outside counsel to assist with that because I’m not confident enough in my knowledge in that area to do it on my own,” Miller said.

Schierholz, who is the only internal counselor for the manufacturer, had to determine whether to use an external attorney to assist with leases because he is not a real estate attorney.

“The balancing act for me is, can I adequately negotiate and draft a lease or amend the lease without getting a real estate counsel on the outside to participate,” Schierholz said.

Sometimes with a lease, Schierholz will do the bulk of the work and then solicit outside input on, for example, the language he used in a draft.

“I will have them review what I have done, or I will talk with them about specific things that I’m not sure about,” he said.

There are also times when Schierholz relies entirely on outside counsel. When Duke Manufacturing develops new products, Schierholz, who also studied engineering, understands the concepts but still hires attorneys for patent work because “that is an area of expertise that I don’t have at all,” he said. “It’s really something that they develop over years of doing it.”

Duvall Le Riche also seeks an outside perspective for matters like internal investigations or a compliance review to ensure that the person reviewing it is not influenced by a personal connection and to avoid a potential conflict of interest, she said.

While companies ask their attorneys to do more than in the past, Duvall Le Riche does not necessarily see that as a bad thing.

“Do more with less can be carried characterized as negative,” she said. But “because my roles have consistently been at emergent-growth, startup-focused companies, I feel very much a strong desire to manage my spend wisely because I want my company to do well.”