Articles Posted in Clients

Mark LeHocky, general counsel of Dreyer’s Grand Ice Cream, is the subject of a profile in the Recorder, March 30, 2007. He tries “to embed our legal team members [three attorneys and soon a fourth] into our various business teams such as manufacturing, marketing and distribution.” That is commendable, as close alignment with clients distinguishes well-managed law departments. But LeHocky goes further.

“We do less obvious things to break down perceived barriers between our legal team and everyone else like having no legal diplomas on the walls and avoiding the use of “Esq.” titles or other things that serve to differentiate attorneys from the rest of our workforce.” Does equality extend to cubicles and compensation? Such egalitarianism is extreme.

Phil Crowley, a senior lawyer with Johnson & Johnson, describes in ACC Docket, April 2007 at 96, some aspects of how his law department determines the value it delivers to clients (See my post of Sept. 17, 2005 on client perceptions of value and satisfaction surveys; and March 18, 2005 about the Cargill needs assessment.). The department surveys its client base. Each year “every lawyer is asked to provide a list of eight to 12 people who can be surveyed about his or her performance over the year, focusing on issues like the ability to provide relevant advice, ethics, leadership, and a number of other factors.” The results of those surveys “get cranked into individual evaluations.”

Crowley packs a number of management decisions into those sentences. The law department conducts its survey annually, instead of at longer intervals or more frequently (See my post of Nov. 20, 2006 on Aviva’s two-year timing; and March 16, 2006 on frequent surveys.). The lawyers pick the survey invitees, instead of a system that surveys clients by level (See my post of Dec. 3, 2006 on selection bias.). The questions he lists go to very subjective characteristics like ethics and leadership, instead of the more common questions about timeliness, accessibility, knowledge of the business – which may well be on the survey also (See my post of Nov. 21, 2005 on unusual questions.). The survey asks not about the law department as a whole but about individual attorneys. Since J&J has around 240 lawyers the survey is a major undertaking (See my post of Nov. 30, 2005 about entire departments or portions.). As the final point, management of the department uses the survey results for each individual lawyer to feed into that lawyer’s compensation decisions.

On April 25, 2006, the Supreme Court of Georgia issued Formal Advisory Opinion 05-2 in which it concluded that a company may enter into an agreement with an in-house lawyer to hold that lawyer harmless for malpractice committed in the course of employment.

Normally, a lawyer cannot make an agreement with a client that limits the lawyer’s liability to that client for malpractice but the Court felt that companies are sufficiently sophisticated so that there is no problem of overreaching and also that the lawyer “does not avoid the negative consequences of malpractice because he or she is subject to being discharged by the employer.” The ruling points out that “the proposed ‘hold harmless’ agreement does not limit liability to third parties affected by in-house counsel representation. Instead, the agreement shifts the responsibility for employee conduct from an insurance carrier to the organization as a self insurer.” (See my posts of Dec. 20, 2005, about malpractice charges against in-house lawyers; and Oct. 24, 2005 for additional comments.).

Nothing ratchets up the value of an in-house attorney as much as a satisfied client (See my post of April 8, 2007 about how to add value.). A satisfied client believes he or she has been heard well by a lawyer, gotten an answer at the right level, and understood that answer in the client’s terms.

This struck me as I read the Harvard Bus. Rev., Vol. 85, April 2007, at 25, about Michael Sheehan, “the renowned communications consultant.” Sheehand would urge lawyers – inside and outside – to LIE.

“L” is for “listen to each word of the question rather than” jumping in and answering too soon. “I” is for “identify the opportunity to answer simply or more deeply”; and “E”” stands for “enhance your reply with something memorable, such as a specific example, analogy, personal experience, or colorful phrase.” A percentage estimate will do the trick (See my post of Dec. 12, 2006 on stories as persuaders.).

Ben Heineman, dispensing Olympian wisdom about law department lawyers, confides that “business leaders were enthused about inside lawyers who could help get things done.” Yeah, ok, what’s new, but what else follows that obvious allure from Corp. Counsel, Vol. 14, April 2007 at 85?

What follows is an expectation bar set very high. Given an inside lawyer’s ability to accomplishes things, the ex-GE general counsel grandly adds that business leaders “were also receptive to counsel participating in core business decisions” – hold your breath – when the corporate lawyers were at the same level as smart, veteran managers: when “the lawyers were also savvy about technology, products, markets, geographies, competitors, etc.” Encyclopedic knowledge and veteran experience in every MBA subject? That bar is nose bleed for lawyers inside, hard-pressed by the rising tide of work, yet even with that breadth and depth execs were no more than “receptive” to the lawyers’ involvement!

CounseltoCounsel, Nov. 2006 at 9, quotes Michael Roster, at the time the general counsel of Golden West Financial, in the context of status reports in-house lawyers prepare for clients (See my post of Aug. 1, 2006 on reasons to do and not to do status reports.).

Roster volunteers that “his internal client surveys show that memos receive the lowest scores in terms of keeping the client apprised of legal events.” Memos are boring and they aren’t read until they are relevant, if they are even remembered at that time. Worse, they take time to do well. Far better, Roster says, to talk informally with clients when you want to keep them up to date.

As reported in CounseltoCounsel, Nov. 2006 at 9, a survey by LexisNexis Martindale-Hubble/Altman Weil asked the respondents – 138 law departments – to choose among seven obstacles to closer alignment between them and their clients. The respondents could choose more than one of the obstacles (See my post of Dec. 20, 2005 that criticizes such a survey methodology.). The results follow, by increasing percentages of respondents who chose them, and then some comments:

A. “Business units are resistant to using outside counsel we suggest.” (6%)

B. “The law department is not organizationally aligned with the client organization.” (10.3%)

An audit report dated January 25, 1999, went to the Board of County Commissioners for Hernando County, Florida. The 20-page study followed up on an audit of the County’s Legal Services Department. For government legal departments especially, and for any small law department, the report has some useful ideas.

One audit recommendation was that the department push clients to complete a Request for Legal Services form. The form would cover any legal services likely to require more than a certain amount of time – not specified – and should have a submission and completion date (at 5).

I question the value of such forms. They could be argued for if a law department feels that clients too casually ask the lawyers to do something, or if clients repeatedly fail to send enough information along and the form reminds them to provide it. But it feels to me like the forms add far too much bureaucratic paperwork, create almost no value as compared to a matter management system, and benefit the law department if anyone far more than clients.

Any businessperson who contemplates checking with the law department knows there is a price to pay. The cost is at the least additional calls, meetings or e-mails, some delay, and possibly serious obstacles. There’s no way around this for law departments; it is always, to some degree, an aggravation to run something by the law department.

Obviously, the benefit to the business executive is avoidance or reduction of risk, possibly business ideas and perspectives, and perhaps compliance with a corporate mandate to obtain legal’s approval. But every time they run something by the law department, executives feel they pay the piper. There’s obviously an upward limit on client satisfaction.

Senior lawyers in law departments understand that within the company they have some friends, some neutrals, and some foes. Friends respect them and use them properly, neutrals need some nudging and education to learn when to come to the law department, but foes stay away. Those non-users raise legal risks for the corporation. The assumption here is that the need for legal services is fairly uniformly distributed among similar business functions. If three comparable functions each keep busy approximately a full-time equivalent lawyer, but a fourth function never calls the law department, something is amiss.

One way for a law department to identify recalcitrant executives is to track and analyze the pattern of matters worked on according to their source (See my posts of April 17, 2006 on matter management systems.). If you overlay the pattern with senior executives, it usually apparent that some area is generating less legal work than its function would otherwise suggest. Once the department identifies those who are reluctant or refuse to use lawyers, other measures can come into play (See my posts of July 14, 2005 and Dec. 19, 2005 on methods of training clients; Dec. 20, 2005 on training clients how to get the most from law departments; and June 28, 2006 on client training possibly increasing workload.). Failing education, there remains jawboning and coercion.