Articles Posted in Clients

That hurts, that view really hurts.

That business managers resent laws and kick the dog of the department that reminds them about its costs and constraints can’t be denied. That it takes time for a lawyer to look at an agreement or an advertisement or a potential patent or a lease is absolutely true. Legal review takes longer than a handshake or just plunging ahead. That clients sometimes skirt the edge of the law, race toward the volcanic center, or go over the precipice – yes, lawyers may stop that and sense the resentment of clients who view them as perpetual obstacles.

In a New Jersey L.J, July 8, 2011 profile, the general counsel of Mercedes-Benz USA remarks, without cavil “I want them [his nine-lawyer department] to feel like they’re part of the solution and not part of the problem because legal departments are always viewed as roadblocks.” Ironic, the car manufacture and the metaphor of roadblock and speed bumps.

According to an ACC Docket article (June 2011 at 78), partners in some law firms are gatekeepers “acting as channels through which communications and legal advice must be directed.” Such an arrangement, by my lights, obstructs, slows, and costs. It obstructs because if someone in a law department has a question, why filter it through a partner who can’t answer it? It delays because of the baton-handoff as well as transmission errors and it costs money any time someone in a law firm touches anything. Assuming you know, go straight to the lawyer in the firm who can best provide the service or answer the question.

The same philosophy ought to govern within the corporation. If an internal client knows the right lawyer in your department for something, they should be encouraged to go straight to that lawyer. They shouldn’t need to clear the question or pass it through the Associate General Counsel who supervises that lawyer.

All granted, this straight-to-the lawyer approach breaks down when law departments want to intermediate requests from internal clients to law firms. Only sometimes do departments allow senior executives to pick up the phone directly.

During a recent consulting project, the general counsel said that about two years ago he had systematically met with nearly two dozen of his department’s major clients. He had asked all them basically the same questions – “How are we doing?” and “How can we do better?” – and compiled the results.

I commend this practice. It’s all well and good for a general counsel to pick up comments here and there from clients. Such remarks have immediacy and value. Far better, a deliberate effort reaches key constituents, tells them ahead of time what you want to hear about so they can prepare, compiles a fairly comprehensive picture of client opinion, and thinks about it as a whole — a far superior practice.

How to get bulky board books to members of the board of directors has always been a problem, if only for the simple minded logistics of photocopying, collating, binding, and shipping the complicated tomes. Some corporate secretarial functions have turned to online software platforms to expedite delivery (and to benefit from other functions such as calendars, secure e-mail, and document repositories (See my post of Sept. 2, 2009: software for corporate secretaries with 11 references.).

In the latest twist I have heard about a law department uses IPads to deliver the materials. At first the idea seems outlandish, but if you have ever used an IPad to read material and annotate it, you start to see the allure of this medium. I presume the directors turn in their IPad at each meeting.

In-house attorneys may fume when told they cannot hire any longer the trusted, familiar counsel they used to, that they must transition work to the large and unfamiliar winners of a preferred counsel contest. Ruptured are the long-standing relationships, gone are the modest bills from dedicated partners cast-away are the institutional histories,

Internal clients of the law department likewise feel pain. They too had broken in the new shoes long ago and were comfortable with the advice and style of the familiar partner. They too suffer disruption and unfamiliarity with the replacements at an unknown (and probably far away) firm. As a final indignity, clients might have to foot higher bills. The angst of lopping off familiar firms spreads from the law department to its clients.

In the Fall of 2010 ALM Legal Intelligence collected surveys from 176 US in-house lawyers. LexisNexis CounselLink published the findings. A part of the report draws on a theoretical distinction of the Association of Corporate Counsel between what it has defined as “traditional” and “proactive” law departments. The archetypal operating styles diverge significantly on several of their nine characteristics.

One characteristic, “Style and Culture,” posits a traditional department as one that “Functions as a ‘law firm’ within the company” while a proactive department “Integrates closely with the business team.” In the LexisNexis survey, 18 percent described themselves as “like a law firm” while 82 percent chose the other description.

On the characteristic of “Work Orientation,” traditionals were described as focused on “project management” while proactives focus on “process management.” In the survey, the split was almost even (53% vs. 47%) among the respondents, but I must confess the distinction eludes me.

Law departments have to provide to their company’s outside auditors sufficient information for them to prepare their reports on contingent liabilities. The law department administrator from The Williams Companies, speaking at Mitratech’s Interact 2011 Conference, said that the department had developed a tool to help with the “complex and not fun to do” task.

Such a tool would quite naturally complement a matter management system See my post of March 12, 2005: comments about major reserves taken for litigation; March 12, 2005: funded matter management system in return for reductions in reserves; July 20, 2005: special-purpose reserve accounts; June 15, 2005 about credit for releasing reserves; Dec. 10, 2005: huge swings when huge litigation requires budgets and reserves; March 13, 2006: a crude summary of FASB Rule 5; June 15, 2006: releasing reserves; Dec. 3, 2007: savings targets, cash basis and reserves and P&L; Dec. 31, 2008: proposed FASB rule on disclosure of reserves for individual litigations; and Jan. 4, 2009: multiple cost centers, and one may be for reserves.).

Marc Firestone, the general counsel of Kraft Foods, told an audience at the SuperConference about his law department’s steps to define what his lawyers mean when they use non-quantified terms. Non-quantified terms – called “estimative language” by the National Security Agency – include “strong probability,” “poor chance,” “pretty good odds,” “likely” and other expressions that convey a probability but can have widely different interpretations between speaker and hearer.

First, the Department formalized a scale so that each variation appears on the scale. The Department reviewed this with their clients so that the range of likelihood was narrowed as much as possible. People mean the something similar when they use a phrase.

Second, the Department set itself the goal to try harder to find data to support any particular use of estimative language. With data, even partial data, it becomes easier to be more precise with words.

At the SuperConference yesterday, Carrie Hightman, the general counsel of NiSource, offered her thoughts on a panel about relations with the CEO, CFO and the Board of Directors. She stressed how important it is to have a “good working relationship” with each of them and offered four particular recommendations.

1. Be very solicitous about the time of Directors. Get them their Board materials on time, for example, which may seem trivial but matters a great deal to some of them. The care and feeding of directors, done smoothly and consistently, will help you get along with them well.

2. Understand your role during Board meetings: mostly as a passive participant. Judiciously choose when to comment and hone your skills as a facilitator who can take the temperature of the room, sense body language, and cut short rambling presentations that no longer interest the Directors.

I read about a company’s use of “life-like chatbots” that are “emotionally intelligent and engaging.” According to an ad from eGain Communications in KMWorld, May 2011 at Profiles 7, “The bot chats with customers, providing answers and processing data, and escalates to live agents when needed.”

A law department might build a legal chatbot (R2D2, Esq.), or entrepreneurs such as specialist law firms might train and license them, that would give guidance, smoothly answer frequently asked questions, point clients to forms and checklists, and call in the cavalry as needed. Voice recognition and natural language processing have come a long way, but the early chatbots for law-related advice might be email based.