Using lawyer secondments may offer a win-win for law firms and their clients, offering staffing solutions for corporate law departments and key training for new lawyers
Corporate law departments report increasing matter volumes and a general inability to hire new staff. For law firms, talent issues remain in the forefront, with the lack of a clear career path factoring as one of the top reasons associates leave their current law firm. These two problems may appear unrelated, but both may have a common solution — secondments.
For those unfamiliar with the term, a secondment is an agreement between a law firm and a client’s law department that sees one or more of the firm’s attorneys work as the client’s in-house counsel for a set period of time. Attorneys working in such arrangements — known as secondees — become the lynchpin of what is really a three-way benefit: the client gets help in managing their higher volume of legal work without incurring the cost of bringing on permanent staff; the law firm builds a deeper relationship with the client that includes vital familiarity with the client’s business needs and internal operations; and the secondee gains invaluable experience to advance their career, either with an eye toward assuming a role as a potential relationship partner for that client or other clients, or perhaps even moving in-house within their own practice someday.
Particularly within law firms with adequate leverage, secondments can prove to be an effective way to utilize associates. Many law firms are facing difficulty today with lawyer productivity, according to the recent 2023 State of the Legal Market report. For associates under secondment, this concern can be significantly alleviated.
Particularly within law firms with adequate leverage, secondments can prove to be an effective way to utilize associates.
First, depending on the fee arranged for the secondment, the law firm may be able to create a guaranteed revenue stream for the associate which is not dependent on fluctuating demand, declining realization, or constant rate pressure. Even if the secondment arrangement is structured to be at no cost to the client, the law firm has created an invaluable training opportunity for the associate that is not otherwise dependent on billable client hours. The associate’s time is being put to valuable use without any direct impact on business development resources.
None of this is to say, however, that there are not potential costs. The law firm will be without the associate’s services during the agreed period, which, depending on the volume of work for the firm, could potentially create a resource gap for the firm. For the client, beyond any agreed fee for the secondment, there is a cost associated with on-boarding the secondee so they can function as a contributing member of the in-house team. If a secondee is inexperienced or requires particularly intensive supervision and training, that cost can grow rapidly. It is, therefore, incumbent on the law firm to ensure that they are careful in selecting the associates they choose to offer up for secondment so as to create the greatest possible value for the client.
Striking the agreement
Details of the secondment can, and should, be included in a secondment agreement. While there are many potential terms to include in such an arrangement, perhaps it makes sense to focus initially on the fee. Some secondments may be arranged on a daily, weekly, or monthly rate; and some may be subject to a fixed fee for a particular project or even for the entire timeframe. Perhaps less frequently, some may be structured on the basis of a significantly reduced hourly rate for the attorney. And in many cases, the law firm may be willing to provide the secondee to the client at no charge, sacrificing short-term revenue for the sake of the long-term relationship with the client and the expectation of future work at the attorney’s anticipated higher future billing rates.
Historically, law firms have been more willing to place associates on secondments during periods when work is slow and less so when the firms are busier.
This latter arrangement may be yet another mutually beneficial outcome of a secondment. The client receives nearly immediate scalability to help manage a surging workload, alleviating a common challenge for today’s corporate law departments. The law firm, in turn, generates a cache of goodwill with the client. And budgets can be structured for the future to provide for the ongoing working relationship between the client and the secondee/law firm.
Historically, law firms have been more willing to place associates on secondments during periods when work is slow and less so when the firms are busier. With this in mind, now may be an ideal time for law firms and clients to be actively discussing secondments. As mentioned, law departments are facing nearly unprecedented pressures, while law firms are experiencing some of the lowest lawyer productivity numbers recorded. Clients are actively looking for ways to increase the value they receive from their outside law firms, while law firms are looking for ways to differentiate themselves in the eyes of clients using some leverage other than simply relying on a pricing advantage.
Secondments are no guarantee of positive results, of course. There are numerous considerations not addressed here that must be taken into account to ensure that both the law firm and the client experience the type of mutually beneficial outcomes that should accompany a successful secondment.
However, the time may be right for secondments to see a surge in popularity, and those law firms that take the best advantage of this strategy may be best positioned to reap the long-term rewards.
This article is excerpted from a practice note titled, Secondment of Outside Counsel to Law Departments.