Lawyer Creates Cottage Industry as 'Outside' In-House Counsel

Gina Passarella
The Legal Intelligencer
November 22, 2006

For companies that can't afford an in-house lawyer, let alone house one on loan from the outside counsel they can barely afford, one New York lawyer has created a law firm based on a unique marketing of the much talked-about concept of alternative fee arrangements.

He calls himself the "spot GC" and markets his nearly year-old practice to emerging and middle-market companies as a cheaper way to handle sporadic or monthly legal needs.

J. Paul Caulfield created Caulfield LLC while still working as an in-house attorney at an intelligence-gathering corporation. Many of the clients who came to his company did not have an attorney and couldn't necessarily afford New York law firm rates.

"The traditional law firms have to get smart with what these businesses are doing," Caulfield said. "There still is not that widespread solution for these companies."

Caulfield's solution is to eliminate overhead by working at his clients' offices on a project-based fee, a monthly retainer or a reduced hourly fee. His fees, he said, range from an average of $175 an hour to $225 for specialized or time-intensive work.

"I invest in technology over brick and mortar," he said.

One of Caulfield's clients, a New York marketer of financial data for hedge funds, hired him on a monthly basis and pays for 20 hours of work each month. Another client, Inside Lacrosse magazine, hired Caulfield to handle legal and public relations work for the publication after the Duke University lacrosse scandal broke.

James S. Wilber, a consultant with Altman Weil, said Caulfield's concept makes sense and has seen similar models throughout the country for a few years.

"It's another kind of example of temporary employment in the legal profession," he said.

In 1998, Charles B. Brown formed his law firm, Corplaw Associates, in Chicago based on the "law department method."

Brown said clients were underserved by law firms who were often too distant and didn't understand the needs of the businesses. The method he chose to use places attorneys in the client's office, right down the hall from the executives.

Brown has his own office where the seven or so attorneys in the firm each have space. While he offers reduced hourly rates, the focus is more on having an experienced law department attorney in the client's office on a part-time basis.

Brown said his business is more like a traditional law firm and has worked for companies with hundreds of millions of dollars in revenue. Corplaw attorneys might fill in for an attorney on maternity leave or help out if a company is rapidly growing, he said.

The lifetime of the engagements vary, with the average time spent with a client at six months to a year. Brown is working on his sixth year with one of his clients, he said.

The attorneys in his office generally work no more than four days a week with any one client and would normally only have two clients at a time, he said.

There is a ceiling to the use of these types of attorneys, Caulfield said.

"Once you get past 40 or 50 hours a month, then they should really start considering whether to bring in [an in-house attorney]," he said.

Caulfield and those like him do have some competition with big law firms from attorneys who market themselves as doing general counsel work for companies.

Julius M. Steiner of Philadelphia-based Obermayer Rebmann Maxwell & Hippel is chairman of the firm's labor relations and employment law department.

He said he has quoted a flat fee for work performed on an annual basis. For 15 years, the firm represented transportation company Laidlaw in its labor negotiations and employment work as well as other more routine services, all for a flat annual fee, he said.

While Obermayer Rebmann no longer represents Laidlaw, Steiner said the firm now has a similar arrangement with client American Medical Response.

"The outsourcing approach on a fixed fee for certain defined work gives the companies some degree of predictability in terms of cost," he said.

Consultants have said that the concept of alternative fee arrangements offered by law firms has been given more lip service than anything else, however.

Wilber said the use of such arrangements within law firms has happened at a "glacial pace." He said if companies are looking to reduce costs, they shouldn't sit around and wait for law firms to start offering up more opportunities for reduced fees.

Caulfield said law firms who attempt to act as outside general counsel can't compete with him because his billing rates are a third to a half of traditional firms and he doesn't have overhead.

"They can't depart that substantially from ultimately what they have to bring in to function," he said of law firms. "It's impossible for them to compete with me when I have lesser square footage."

Brown said his biggest competition is from the attorneys doing this type of thing out of their home for the short-term. Brown said his advantage is that he is in it for the long run.

Both Brown and Caulfield said this type of law firm model would be a perfect fit for women who are trying to balance a career and family or who are coming back from maternity leave.

Caulfield said that while he is currently a solo practitioner, he would like to grow the number of attorneys in his firm. He said a woman balancing career or family or an attorney who is looking to retire might be a perfect fit.

Bob Carpenter, the publisher of Inside Lacrosse, hired Caulfield to handle his public relations and legal work surrounding the magazine's response to the Duke lacrosse scandal.

The company is small, growing and overworked as it is, Carpenter said. Caulfield helped Inside Lacrosse meet its objectives during that time, and Carpenter said there were several areas in which Caulfield could assist the magazine.

"I don't think the window is really narrow for using someone like Paul," Carpenter said.

Brown has found himself useful not only in helping out with legal work, but helping build the legal departments of some of his clients. He said he often prefers to work with companies who do not yet have a legal department so that he can assist them in finding the right people.

Caulfield will, at times, take his experience as a prosecutor in Manhattan to assist legal departments or other outside counsel with litigation needs, he said.



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