Articles Posted in Clients

It may be futile. No matter how much a law department strives to increase client satisfaction, shave costs, sculpt processes, and push shoulder-to-shoulder with clients, the department will not earn enough respect if in-house counsel can’t offer clients the attorney-client privilege.

Lacking that shield of protection, that encouragement to clients to open up to their inside lawyers, law departments in the UK and other countries, including India, will never enjoy the stature of their counterparts elsewhere or their external outside counsel who are cloaked with the privilege (See my posts of July 25, 2005 about European views; Oct. 31, 2005 about the attorney-client privilege as it applies to corporate attorneys; April 2, 2006 and a Lex Mundi survey.).

A redoubtable law department GC, recently arrived from a major law firm, takes the position that the law department should do whatever helps its clients. He was glad to handle stock option processing and contract administration, for example, because lawyers do it better than anyone else in the company.

I disagree, and attack those activities as quasi-legal (See my post of July 21, 2005 that criticizes law departments that do quasi-legal tasks.).

The difference is that a law firm will do whatever its client asks it to do, because its partners thereby make more money. A law department, with fixed resources and only a certain set of talents, must be more picky, and must home in on core competencies (See my post of Aug. 13, 2006 about core competencies.) and eschew quasi-legal tasks. The view of a law firm and a law department are not commensurate.

“The GC should also evaluate the Board to make sure members properly understand and exercise their fiduciary duties.” This comment from a participant in the Nov. 2005 Third General Counsel Roundtable of the Economist Conferences (at 21) was followed by a suggestion: There are surveys that can help the senior legal officer do the evaluation.

The proceedings refer to Board self-evaluation tools that can help identify areas to strengthen in Board performance. One GC said that her Board members complete a questionnaire on key issues, such as Board strategy, people development, compensation, and committee operations. The general counsel discusses the responses with each Board member and spends additional time on those functions that need additional attention, such as litigation management or compliance reviews.

No surprise that we hear over and over about how important it is to tell business executives about legal costs the law department will incur on their behalf. These forecasts honor the Golden Rule and keep managers in the loop.

To tell the senior manager about anticipated legal costs does not end the obligation; the responsible law department attorney also needs to inform that manager’s financial staff. They are the ones who need to budget for the cost, report the details, or accrue for the expenditure (See my posts of Aug. 24, 2005 and Sept. 17, 2005 #4 about accruals.).

The most compelling reason for a law department to tell clients about its services is to fulfill its role – to help the business succeed and reduce legal risks. So preventive law training programs may have the effect of marketing but the purpose of role-accomplishment (See my post of April 13, 2006 about Phillips and anti-trust training.). There can be other consequences when a law department tells managers of its capabilities and services (See my posts of Aug. 1, 2006 on second-order consequences and Aug. 28, 2005 on unintended consequences.).

Marketing can raise or lower client satisfaction. Raised scores derive from client appreciation for what the law department offers. Lowered scores result when client expectations rise but performance does not match (See my post of Nov. 21, 2005 on satisfaction surveys raising expectations.).

Marketing is aimed to build public relations and good feeling. Newsletters by law departments invariably tout the successes of the department (See my post of Sept. 4, 2006 about them.).

In-house counsel will be valued increasingly for their admixture of business insight and legal judgment. If that prediction bears out, then one consequence, overlooked in the clamor to have in-house counsel demonstrate more business understanding and commercial competence, is that business executives who rely on those lawyers will evaluate their performance, and those evaluations will have teeth (See my posts of July 16, 2005 and April 16, 2006 about business acumen.).

Today, managers of corporate lawyers pick up the odd comment here or there about a lawyer and knead it off-hand into the dough of a performance evaluation. Nearly all of the influential assessments come from lawyers, however, unless the evaluated lawyers report to a business executive. Tomorrow, when business competency rubs shoulders with legal competency, the assessments of business clients will be the yeast that raises the dough

Back in the day, the fin de last siècle, many of the larger law departments prepared and distributed to their clients what were generally called newsletters. The typical newsletter had a couple of success stories that patted the law department on the back, a profile of one of the lawyers, an explanation of an area of law, something to do with improvements in the law department, and announcements of weddings, babies and promotions. The newsletter (aka client report, law department update) tried to humanize the department, educate clients a tad, and promote the services of the lawyers.

Today, legal department newsletters have all but dried up, victims of too much work, too little time, and the worry that if you have time to publish a newsletter, others in the company will suspect that you’re not working hard enough on value-added activities (See my post of May 1, 2006 on that loose term.).

I miss newsletters, and urge law departments to think of efficient, educational, yet simple communiqués for their clients.

You just never know when a catastrophe might befall your company, so a number of law departments have prepared a business continuity plan. These plans explain what members of the department should do if there is a major incident, such as terrorism or earthquake, that renders your normal office inaccessible.

A typical plan appoints someone to be the continuity representative. It urges everyone to keep in a safe place away from the office the phone numbers of key business people, as well as whom to call from an interlocking chain of callers, and copies of vital documents that they need to keep working if the office shuts down. Plans outline how to evacuate the office and how best to keep in contact with others and continue to work. They set out the responsibilities of various members of the legal function in the event of a traumatic disorder.

In February 2006, Mahlab Recruitment and Harris Cost Lawyers surveyed the members of the Australian Corporate Lawyers Association (ACLA). The survey found that almost a third of the law departments charge costs to their business units. About 17 percent charge by hourly bills at a single hourly rate; another 20 percent charge by hourly bills, but use different hourly rates for different lawyers (See my post of May 14, 2006 that disagrees with multiple rates.).

Some of those law departments (13%) charge back business units according to a percentage allocation based on time data; some 37 percent charge based on informal estimates of time, while 13 percent use other bases for charging (See my post of May 16, 2006 on the definition of “chargeable time.”).

What kind of work does a client generate? What is the volume? Who at the client group tends to call us? A law department that researches, ponders, and answers these questions will be able to create client profiles. Having done so, the department could segment client groups into categories, such as “high maintenance” or “risk embracing” or even “doesn’t care whether we exist.”

What is a “client profile” that would help with these issues? It would be a guidelines for the kinds of services the client needs, who its key players are, the direction its business initiatives are going, preferences for outside lawyers, and anything else that would enhance client service and client satisfaction (See my post of May 14, 2005 on Service Level Agreements (SLAs).).