THE BOTTOM LINE

When an agency hires a private law firm, the combo is volatile

Bob Little

The other day I was browsing through the General Services Administration schedule, fantasizing about what I could buy if I had a federal credit card, when I found a special item called Professional Legal Services.

I found it because I was looking for it. I was looking for it because an agency with which I have been associated over the years had received a letter from the listed law firm touting the fact it was the first to be awarded a schedule contract for professional legal services.

Because I am a legal services professional and have been known to be on the public side of the fence, I wondered about the implications of an agency hiring a private law firm, perhaps even off the Internet.

I wondered how a program office tells its agency's general counsel that it just hired a law firm. A familiar metaphor involving amorous porcupines comes immediately to mind. There are some things you definitely would not say. These include, 'They cost a whole lot more than you do, so they must be better,' and 'They have specialized expertise in areas that you couldn't possibly figure out.'

My next questions concern whether the legal matter at hand is inherently governmental and the essential matter of who is the client. The heads of most agencies think they are the clients when agency attorneys give legal advice. But who is the client when the services come from outside the agency and the agency head isn't aware that advice is being sought? What if the advice contradicts advice given by agency counsel?

One might argue that you don't have to accept legal advice, you just have to pay for it. But if the professional legal services are not inherently governmental but commercial, then someone might point out that you are contracting out a commercial activity, with all of the tricks and traps associated with the Office of Management and Budget's Circular A-76.

There are other practical problems associated with hiring a private law firm. Unlike, say, architects or engineers who have statutory caps on what they can charge, lawyers don't have a limit on what they can charge for legal services.

One of the oddities of this particular contract is the price term. To quote: 'Task Orders under the contract are preferred to be firm-fixed price, but Labor Hour and Time and Materials task orders are acceptable.' This might include opposite ends of the pricing spectrum'fixed-price places the cost risk on the contractor while labor-hour puts it on the government'but they can bring the same result.

Suppose you want a firm-fixed price task order.

The law firm will be happy to negotiate one. Its output, however, will either be a level-of-effort or work that the firm has already done for another client. Your answer might be to say, OK, we'll only pay for the hours you spend on our issue. The firm is happy to oblige there, too.

You get to play the partner pyramid game. Or rather, the firm does, with your money. The junior associate does 10 hours of work, then prepares for two hours to brief a senior associate so that both can attend a two-hour meeting with a junior partner. The junior associate meets with the senior associate for two hours, then the senior associate prepares for the meeting with the junior partner. And so on.

This actually could be the most efficient use of everyone's time and result in as good a legal analysis as you will find anywhere. But you'll notice that controlling the rate means very little when the firm controls the number of hours

So, when you do tell your general counsel that you just bought legal services, I suggest using e-mail or a telephone.

Bob Little, an attorney who has worked for the General Accounting Office and a Washington law firm, teaches federal contract law. E-mail him at rlittle13@aol.com.

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