Articles Posted in Clients

An obituary appeared here six months ago (See my post of Sept. 4, 2006 and its view that department newsletters have dried up.). The anti-newsletter forces described in that post certainly exist, but there are not just survivors but thrivers. InsideCounsel, Sept. 2006 mentions that BMO Financial (at 65) e-mails its newsletter, “Legal Briefs,” to 400 executives and 100 senior managers. The BMO law department abolished the former glossy and expensive version, which lightens the budget by “a couple thousand dollars per issue.”

The very next page describes the bimonthly e-newsletter that the lawyers of Lucent Technologies distribute. From the short mention, it is not clear whether or not the e-newsletter also goes out to clients of the department. It may be an internal method to share knowledge and keep people in the loop.

One variation on this idea surfaced already with UPS, where many of its lawyers are former field personnel (See my post of Jan. 25, 2007 on “about half the department.”). Another way to align lawyers with their clients, or at least have them familiar with the others’ moccasins, is to have lawyers work side by side with them. The general counsel of EMC Corp., Paul Dacier, interviewed for InsideCounsel, Feb. 2007 at 68, praises that real-world familiarity: “There is no better way to understand the business and appreciate the issues our sales people have to deal with than being out in the field and rocking and rolling with them.”

Better still, since tone is set at the top, Dacier continues “Not only do I make sales calls, but most of my lawyers do too.”

Later, in the same issue of InsideCounsel, Susan Lichtenstein, the general counsel of Baxter International, adds another technique for getting to know the business: “I can’t think of a better way to get educated about what the business goals are near-term and long-term than listening to the quarterly earnings analyst call.” I’d buy stock in that idea!

An excellent example of an innovation that builds knowledge, reduces quasi-legal work by the law department, offers client training, and promotes client self-service comes from the law department of Kraft Foods. The particular example cited in InsideCounsel, Sept. 2006 at 62, applies to joint ventures.

The material compiled by the law department summarizes six questions that anyone in Kraft who considers entering into a joint venture must answer in the affirmative. It “outlines the advantages and disadvantages of the different types of joint ventures; and explores the risks that need to be assessed.” The online material also includes “downloadable legal forms, including confidentiality agreements, term sheets and licensing agreements.” On the drawing board are guides that target areas such as international trade, customs, and subsidiary management.” Kraft’s is a wonderful example of something that almost all law departments could emulate.

Law departments may not like what comes back to them from a client satisfaction survey, but the unavoidable truth is that what clients believe they experience is for them reality. Justified or not, client perceptions are for law departments the hill to climb.

Likewise, ratings of employees on morale surveys may dismay managing lawyers in a department, but what the members feel shapes how effectively they work and interact – reality certainly follows from their perceptions. As a third example, if several law firm partners sense that a law department lacks decisiveness, clarity of instructions, or adept managers, quarrel as they might, law departments must live with and deal with those perceptions.

It simply won’t do to deny the logic of the other side’s evaluations, or patronize clients, employees or outside counsel as unable to perceive the truth, nor to shrug off their opinions as quirky, trivial, explicable, and unrepresentative.

As part of the research for my book on client satisfaction for law departments I analyzed 35 surveys done by law departments. Many of them asked about the same attributes, and the ones described hereafter dominated the list. The number in parentheses indicates how many of the set included that attribute.

Timeliness (26), knowledge of business (20), accessibility (19), proactive (17), interpersonal skills (16), clear advice (16), keeps me informed of progress (15), knowledge of law (14), creative advice (14) (See my post of Jan. 10, 2006 on creativity in-house.), team player (13), responsiveness (11) (See my post of April 27, 2005 about returning calls within 24 hours.), and cost consciousness (10).

It makes me think that cost consciousness is asked about less frequently because law departments don’t want to know the answer. As to knowledge of the business, see my post of July 16, 2005 on business acumen.).

There’s an unanswerable question for you. As I read about Palm Harbor Homes in Counsel to Counsel, Jan. 2007 at 14, I paused where it states that the $710 million maker of factory-built homes has no internal legal department. Instead, the company relies heavily on a local law firm for many of its legal needs.

The thought arose: What events lead a company to hire its first in-house lawyer (See my post of April 15, 2006 on solo lawyers and stress; and Feb. 15, 2006 on six ways solo in-house lawyers have fewer management hassles)?

One factor that determines the answer is the degree of satisfaction the company’s executives have with their outside counsel. If the thing ain’t broke …… I suspect that also on the list of determinants are the personal beliefs and values of the Chief Executive Officer. If that person appreciates lawyers, the department will appear more quickly.

Audits of legal risks, or any actions by in-house lawyers that identify legal risks, ought to estimate the potential impact of the risks (See my post of May 14, 2005 about “identify, size, and match” risks.). Other steps in legal risk management (See my post of Aug. 14, 2005 with its skeptical view of that amorphous term.) include to map legal risks (See my post of Aug. 26, 2005.), to quantify them (See my post of Nov. 11, 2005.), and periodically to assess them (See my post of Dec. 22, 2005; and Nov. 15, 2005 which collects references.).

A summary of these ideas by Duff & Phelps consultants appears in Met. Corp. Counsel, Vol. 14, Dec. 2006 at 16. “Prioritize risks by a scoring method that weighs (i) the gravity/severity of the risk, (ii) the likelihood of the risk, and (iii) the ‘controllability’ (mitigating procedures) of the risk.” Well put. Note also that the consultants recommend placing different importance (weighting) on the three components (For more on weighting factors, see my posts of March 25, 2005 on client satisfaction scores; Nov. 24, 2005 on bonuses; and Aug. 30, 2006 on grid analyses.).

I believe that to best assess the value of a law department, ask its clients. They know, quietly and intuitively or vocally and explicitly, whether the lawyers help them make money and grow the business. We might refer to that meaning of “client” as the individual executives of a company.

The backdating of stock option grants, with the connivance of the general counsel, forces us to accept that to please individual executives may be to violate expectations of a larger group. Thus, “client” also suggests the company as a whole. Poorly done due diligence on an acquisition may make sense in the short term, but the client/company suffers as undiscovered liabilities or legal issues belch out later.

The third level of “client,” and the most expansive, includes shareholders, the legal profession, and people in the communities touched by the company. Law departments affect these constituencies also, but few people think about this broad circle (See my post of June 5, 2006 about general counsel and their influence on share price.).

Clients appreciate corporate lawyers who give them a numeric sense of the likelihood of a legal event happening. Everything “might” happen, but what is “likely” to happen and how “likely,” they plead. Whenever you can do so, alleviate the uncertainty with a numeric probability.

If you say that there is a “pretty good chance” that a lawsuit will be filed, that term could variously mean 40 percent, 60 percent or 75 percent. As explained in Alternatives to the High Cost of Lit., Vol. 24, April 2006 at 65, other terms such as “likely,” “probably,” and “generally” can mean significantly different odds to different people – notably speakers and listeners or writers and readers. The likelihood that both will grasp the same number is very small (there, I just committed the error in writing). Maybe its 20 percent?

The 90-lawyer department of Aviva collects client satisfaction data by different means and at different frequencies, according to Law Dept. Quarterly, Sept.-Nov. 2006 at 45. The variations are based on the level of clients. “Clients surveys are sent out to senior management every two years, and more regularly at lower levels. These are coupled with one to one interviews, and regular service review meetings.”

One can only admire these multiple assays of corporate client attitudes. Along these same lines, every law department can tailor its own set of data collection measures