Articles Posted in Clients

A piece in the Sloan Mgt. Rev., Fall 2006 at 21, set off some thoughts about client satisfaction and alignment. Flexible companies, the authors state, “maximize the ‘surface area’ of the organization by connecting as many employees as possible with the external environment.” Translated to law departments, I take the point to be that the more internal clients who have dealings with someone in the law department, the better the law department responds to the needs of its company.

Client satisfaction scores, I have posited, can be weighted to give more importance to respondents in the higher ranks of the company (See my post of May 31, 2005.). That is one way to adjust client opinions about the law department.

If the surface area perspective spreads, another weighting might be to track how many people in a given year come to the law department for help and counsel. Those client groups with more people who use the law department would count for more in satisfaction ratings.

One of the eternal truths about law departments is that they expect their law firms to plop down no major surprises. Don’t bushwhack us, department managers say to law firms, and help us foresee as much as possible potential major events.

The same advice applies in a second direction, to those in-house lawyers who report to the general counsel. “Don’t let me surprised in front of the CEO,” plead general counsel, “by that person knowing something about a legal matter that I should have known.” Keep me promptly advised of possible scenarios and late-breaking, important news.

The third direction where one finds the “no surprise” rule is with the CEO. The top executive also does not want to be ambushed by something legal that could have been warned about. One obligation of the general counsel is to brief senior executives so that they can respond knowingly to legal questions and circumstances.

A piece about the newly-appointed general counsel of Marriott International, in the Bisnow on Business E-Letter, May 2007, mentions that Ed Ryan communicates with the chairman Bill Marriott with a “constant stream of written memos and e-mails.” The two of them, additionally, talk directly at least twice a week.

To be sure, not all general counsel report to the CEO. Of those that do, I have not seen data about the typical amount of time they spend with the CEO, either alone, as part of executive committee meetings, or in other meetings. My speculation is that it is not all that much time every week – perhaps an hour alone every fortnight – and that the larger the company the less the CEO face time.

InsideCounsel, April 2007 at 59, draws on several surveys of in-house compensation. At one point it cites one survey for the proposition that business unit performance is a fairly common determinant of bonus awards (See my post of April 8, 2007 for more on three other determinants of bonuses; and Jan. 15, 2007 for some weaknesses of bonus awards.). That proposition is cause for worriment.

To pitch bonus amounts for lawyers dedicated to a business unit substantially on their unit’s performance makes it harder to assign lawyers to troubled units, yet those are the units that may most need legal counsel. It causes bonuses to fluctuate irregularly and clobbers internal equity. Specialist lawyers who support multiple business units will complain and there will be tension.

But, when you bonus rises and falls with your unit, it does align the lawyer to the business unit’s fortunes, which has good and bad consequences. Good because lawyers may try harder when they have a stake in the outcome; bad because those same efforts may degenerate to loss of objectivity and spine – in-house counsel represent the entire corporation.

Scoff I did when a recent survey brayed that for many law departments who are selecting firms the prestige of law firms was their guiding light (See my post of May 4, 2007.). Not simply as a proponent of hire-the-partner-not-the-firm, I doubt this finding. Prestige matters only where people think that cover your ass (CYA) is likely; “You can’t blame me for the snafu on that major matter,” says the general counsel. “I picked the crème-de-la-crème High, Lee & Regarded” (See my post of Dec. 28, 2005 on second opinions and lack of confidence in in-house staff.).

When the wheels come off, the protective cover that “I hired the best” only works if the CEO and other senior executives perceive High, Lee to practice law on a pedestal. Prestige protects, in other words, only if the fame and good name of the law firm has seeped into the highest executive levels of the company.

Many general counsel believe that publicity about the achievements of their department will benefit the law department (and incidentally the career of the general counsel). If members of the law department speak at conferences write articles, are quoted, or win awards, all that inures to the benefit of the department when it comes time to negotiate budgets and headcount or to attract and retain capable lawyers (See my post of June 6, 2006 about publicity sought by law departments.).

But, as no good deed goes unpunished, it may be that a law department in the news – even for favorable commentary – troubles the CEO and other senior executives. They may see the efforts as self-aggrandizement, manipulation of perceptions, inappropriate use of time, or even disclosures of proprietary advantages. They may resent a general counsel who is in the spotlight and who receives awards and commendations. They may mutter that the lawyers should be practicing law, not public relations.

I strongly favor law departments that promote themselves and their worthy accomplishments, but this post acknowledges that others may criticize the practice.

InsideCounsel, June 2006 at 70, profiles Charles James, the general counsel of Chevron. Looking back on when he joined Chevron in that role, James recalls that “the chairman of Chevron wanted a world-class legal organization and I don’t think he felt had had one.”

CEOs should not blithely say they want a “world-class” legal department. The cost of excellent talent is high (See my post of April 8, 2007 on pay by area of law.). Turnover would be incessant as other companies cherry pick off the shiny maraschinos (See my post of May 20, 2005 about a general counsel’s kirsch of having a very prominent attorney.) The jostling and elbowing among the over-achieving, competitive and egotistical cream-of-the crop would be blood curdling (See my post of Oct. 10, 2005 on competition; and of April 30, 2006 on mentors and threatening successors.). Plus, only a small portion of legal department work needs legal brilliance (See my post of Dec. 5, 2005 on rocket science and of commodity work.). So, if the CEO means by “world class” a plenitude of extraordinary legal talent, the goal is misguided.

Deep within the LexisNexis Martindale-Hubble 2005 “Study into the European market for legal services,” there are findings from a survey regarding “defining excellence in deliver” (at 20). Some 150 law department respondents ranked first, second and third from among seven choices concerning what they think defines excellence in terms of service they provide to their organizations.

Some comments are in order for the top four choices: (1) “Support corporate transactions by providing good and timely advice,” (2) “Educate business managers to avoid risks,” (3) “Provide guidance to help businesses meet their objectives,” and (4) “Understand and interpret laws regulating or impacting the company.”

Legal advice on transactions (1) is more focused than education of clients on legal risks (2), but there is much overlap. Likewise, counsel given to clients to help them meet objectives (3) encompasses transactional services (1) and avoidance of legal risks (2). And applying the law (4) applies to each of the three preceding services.

The LexisNexis Martindale-Hubble 2005 “Study into the European market for legal services” at 15, lays out the rankings that 150 senior in-house counsel gave to a dozen important tasks and issues. Based on a scale from 0 (very low) to 10 (very high importance), here are the results:

1. “Working more closely with business units” (8.1)

2. “Corporate compliance and reputational risk” (8)

An odd, troubling point surfaces from a survey done in 2004 and the six-page report of its results about the internal legal functions of two-year US colleges. Although clumsily phrased in the quote that follows, here’s its point: lawyers in-house might run over their clients or make everything too much of a legal issue.

“The in-house two-year college attorney recognizes the risk of involvement leading to domination of the process by counsel.” The survey asked about domination because a prior survey found that 28 percent of college administrators felt it likely that the lawyer would dominate.

In the 2004 study, nearly half of the lawyers were “neutral” on whether there was attorney domination. That metric makes me furrow my brow why more did not deny it. I guess the concern is that a lawyer, vested with mystical abilities, impenetrable knowledge, and the grandeur of the law will over-power mere mortals and cow them intellectually. As a lawyer, I will put it simply and gently for any non-lawyer readers: no way.