Cost of Services
General Counsel's services are divided into two basic categories, "internal" and "external," where the former deals solely with the client and is flat-fee based, while the latter deals with third parties and is billed hourly. Pricepoints for both are based on maximizing economies of scale, efficiency, and aligning GC’s interest with those of its clients.
Internal Consulting. GC offers its clients unlimited access to an outsourced general counsel, without billable hours, for all issues which do not involve third parties external to the client. Thus, clients can "... run it past legal ...". Examples of "internal" services include:
- drafting employee manuals and applications;
- drafting contracts for use with the client’s customers or vendors;
- review of insurance coverage;
- ongoing advice and counsel "behind the scenes" during negotiations with third parties;
- risk management for all aspects of the business; etc.
External Services. Any services in which GC interfaces with an outside third party on behalf of a client would be considered "external." Thus, drafting a contract for a client would be an "internal" service. By contrast, actually handling the negotiations regarding that contract with a third party on behalf of a client would be an "external" service.
External services must be charged at an hourly rate because GC has no control over what a third party will do, or over how reasonable or unreasonable that third party will be. A relatively simple matter may thus take much longer than anticipated if one is faced with a truly unreasonable opponent.
However, unlike any other law firm, GC’s hourly billing structure is reversed, with the most expensive rates at the inception, tapering off over time. GC charges per hour actually drop after the first 50 hours, and drop again after the next 50 hours, (on a per-matter basis, with negotiable retainers). Thus, it is in GC’s own interest to resolve any external matter as quickly as possible, so it can maximize its own efficiency. In this way, GC’s interests are firmly aligned with its clients, as opposed to traditional law firms, who make their money by dragging out external matters for as long as possible.