Alternative Fee Spotlight: The Outside General Counsel Arrangement

In the rapidly changing environment of the delivery of legal services to clients, including insurers, third party outside general counsel providers have begun to offer as-needed office of general counsel staffing to insurers and other businesses.  Insurers and businesses, however, can find the same benefit in the outside law firms they have been dealing with for years.  There is a way to have the best of both worlds.

The arrangements vary widely, from counsel actually occupying the physical space of the client on a full or part time basis, to a looser arrangement with outside counsel staying at her outside firm.  The arrangement offers the flexibility legal departments now require to meet their obligations as efficiently as possible.  The General Counsels’ offices get the benefit of the knowledge and experience of an outside lawyer but at a far greater control over the cost of such services.

Outside General Counsel arrangements generally involve fixed fees for a set amount of time based upon how much of the outside counsel’s workweek the insurer will utilize.  The outside lawyer’s time is utilized as the legal department sees fit.  In practice, it oftentimes involves outside counsel providing coverage opinions, and coverage and bad faith litigation support and representation , but the relationship can expand to such diverse matters as regulatory compliance, claims handling, and fraud investigation.   The duration of the arrangements can be short term, long term, month to month, or ad hoc — again, the beauty of the arrangement lies in its inherent flexibility.

The arrangement provides the additional benefit of outside counsel getting to know the procedures and operations of the legal department  to which she is deployed from a much closer vantage point than she would otherwise have.  Outside counsel even get a sense of the business and mission goals of the both the insurer and in-house legal department — benefits which can and will extend far beyond the duration of the outside general counsel arrangement.

For insurers with legal departments looking to stay flexible and to retain cost controls over the use of outside expertise, the outside general counsel option could be the puzzle piece needed to control legal spending, and ensure access to outside expertise and jurisdictional familiarity.

For more information on providing your legal department the benefits of an outside general counsel arrangement on shorter or longer term bases , reach me at chaddick@dmclaw.com or 717-731-4800.

Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than three decades, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at chaddick@dmclaw.com or 717-731-4800. View all posts by CJ Haddick