Thers is a growing inclination, in corporate America, to rely on staff attorneys inside the company to handle legal matters and to avoid, where possible, hiring expensive outside counsel. Attorneys on a fixed annual salary usually cost less, even when the company pays for fringe benefits and overhead, than advocates who charge by the hour. There will always be cases, of course, when an outside lawyer with special expertise or uncommon skill would be a better, if more expensive, choice. But as a rule, corporations try to keep as much legal work as possible in their own shops.

The federal government, like these other large organizations, does extensive legal business and employs a large staff of attorneys. You may not have realized, though, that the government farms out a lot of legal work and, in some cases, pays very high hourly fees to outside counsel. Recently, the National Law Journal filed Freedom of Information Act requests with dozens of federal agencies asking for information on the use of outside counsel in the last two fiscal years -- the firms used, the work done and the fees paid. The results are surprising.

The government, during the years in question, paid more than $50 million to private attorneys at hourly rates ranging up to $285. One agency paid a New York lawyer $205 an hour to fight its landlord in a rent dispute. Another hired its former general counsel for advice at $99.99 an hour. Some, particularly bank regulatory agencies, appear to use outside law firms routinely -- at great cost. Dozens of departments and agencies, including those with complicated litigation responsibilities like the SEC, the FTC and the EEOC, use no outside lawyers at all. Overall, the picture is confused and unbalanced, and there appears to be no government-wide policy on the hiring of outside counsel.

Three steps should be taken right away. Responsibility for authorizing an agency's use of private attorneys should be placed in a single government office that would establish guidelines, choose the firms to be engaged and negotiate fees. Consideration should be given to creating a corps of government attorneys that would be available to all agencies and departments to handle routine problems that are not the ordinary responsibility of the agency's own lawyers -- landlord-tenant cases, for example, or employee relations. Contrary to popular belief, the Justice Department does not provide these services. Finally, an hourly cap must be established for fees. The administration strongly supports legislation that would set a limit of $75 an hour on payments to attorneys who win cases against the government. That may or may not be the right dollar amount, but the idea of setting a fee schedule, as we do for health-care providers, makes sense, ensures fairness and will save money.