Articles Posted in Outside Counsel

I had to smile at the questions, published in the Patent Lawyer, Vol. 3, Spring 2006 at 3, one US IP litigator recommends corporate counsel should ask when selecting patent trial counsel: (1) are you registered to practice before the USPTO; (2) have you tried 10 or more patent cases in the last five years and with what outcomes; (3) can you provide “tape recordings of arguments made by [you] or [your] firm before the U.S. Court of Appeals for the Federal Circuit or for arguments before the U.S. Supreme Court”; (4) what are the names of five corporate counsel or client officer references.

Care to guess what one US lawyer happens to be able to affirmatively answer those questions?

I doubt that general counsel or chief patent counsel conduct such an exhaustive search – except of course to settle down for a good listen to recordings of the oral arguments before appellate courts – when they need to retain patent litigation counsel. Not that any of the questions are useless, but they are quite demanding and time-consuming.

Based on my consulting to seven law departments that have conducted competitive bids using RFPs and other sources of experience, here are the 10 commandments:

1. Answer the questions asked in the RFP.

2. As much as possible, give an example or reference for an answer. Rely on reality.

Allstate Insurance Co. whittled its list of 300-400 law firms nationwide to 13 firms, according to Jack MacKay, assistant general counsel for law administration, in the Chic. Daily Law Bulletin. As Wilmington, Delaware-based DuPont famously reduced its outside counsel, so did Allstate, and the insurance giant planned to have that bakers dozen of firms handle 80 to 90 percent of its external legal work.

The article quotes MacKay as saying that his law department’s clients want the highest quality legal services at the lowest possible cost and in the most responsive manner. “But that’s where the simplicity ends. My view on convergence? Put simply, its complex – and perhaps does not even work. For more on this topic, see my recent article in Legal Times, March 20, 2006 at 42.

Having just read a 2000 white paper by Steele Scharbach Associates, I got to thinking about their term “collaborative computing.” The two authors write that collaborative computing covers three basic technologies: groupware, workflow, and document management.

My thoughts went to how law departments can use technology to work more closely with their law firms. Joint, online document drafting; video-conferencing; data entry on both sides into matter management systems (See my post of April 2, 2006 on Predix); e-billing exchanges; extranets (See my post of Aug. 27, 2005 on the seeming scarcity of extranets.); joint updates of law department intranets (See my post of April 5, 2005.); real-time access by clients to time and billing systems. Perhaps several of these fall into the basic technologies of the white paper.

Once upon a midnight dreary as I pondered weak and weary over whether there are differences when law departments retain outside counsel for litigation or for transactional matters, I was stumped. Suddenly, a raven appeared.

“Technology,” quoth the raven. Undoubtedly there is more software and hardware involved in large-scale litigation (See my post of Oct. 1, 2005 on e-discovery software, Jan. 4, 2006 on e-billing, Sept. 10, 2005 on myths of matter management systems, and Aug. 27, 2005 on extranets.) than in a major acquisition, for example.

“Deadlines,” quoth the raven. Transactions, such as a lease negotiation, can have a more controllable effort and period of time and therefore perhaps are more amenable to budgets than litigation with its well-known vagaries of judges, dockets, and adversarial activity.

(1) The urge to converge, as illustrated here, leads to massive – and therefore expensive – law firms. The French financial services giant recently underwent a review of the firms that it deems members of its nine-firm global roster, Legal Week, Vol. 8, March 2, 2006 at 1. Of those nine, four are Magic Circle firms (Allen & Overy, Clifford Chance, Freshfields, and the newcomer, Linklaters). Three others are huge firms: Shearman & Sterling, White & Case, and Orrick Herrington. Rounding out the panel are Gide Loyrett Nouel and the UK firm, Norton Rose. (For other arguments against convergence, see my article from Legal Times this month.)

(2) It takes time to cull through law firms and make decisions. SocGen started the review in June 2005 and announced its results, at least for the global group, ten months later.

(3) Convergence programs always have exceptions. For example, here the French bank has completed separate national panels for the UK and for France and intends to add others covering Central and Eastern Europe. Not stopping there, the bank is “drawing up a series of sub-panels covering [11] niche areas.”

A white paper by executive search firm BCG levels blast after blast at law firm lawyers who are seduced by the siren call of a recruiting law department. BCG praises the training a lawyer gets in a law firm, but says that “once an attorney goes in house, he/she is unlikely to be supervised with this [extensive law firm] chain of command.” Maybe not, but most lawyers who join a law department after four or more years in a firm have already been reasonably well trained. BCG holds the opinion that law firms thereafter become sycophants and do not guide in-house counsel.

Two sentences express this fawning abdication of professional responsibility and really irk me. “Incredibly, in house attorneys may even find poor work they do praised by outside law firms representing the company. Very few law firms ever criticize the work product of the in house counsel of their clients.” Such a sentiment, that law firms toady, staggers me. For one reason, the reputation of the outside firm is on the line. For another, if a piece of work stinks, won’t someone look at the partner and say, “How did you let this go out?” Third, law departments criticize work product of law firms and the qualities of their lawyers; doesn’t that invite a reaction? Finally, law departments retain outside counsel to bring specialized knowledge to bear, and if a firm forebears, if it thinks that obsequious sucking up keeps clients loyal, it is sadly wrong and ought soon to be discharged.

More than half (56%) of the top 200 US law firms use some shade of blue as the primary color in their graphic identities or logos, says PARTNERS+simons in Law Practice, Vol. 32, March 2006 at 9. Commentary on this stunning finding explains that clients – law department lawyers who are not color blind – sense that blue communicates calm and is associated with royalty and authority (think Big Blue, the Blue Danube, and Blue Bayou).

The 17 percent of those firms that choose shades of red appreciate that to clients this suggests excitement, action and aggression (think the Red Baron, Red Brigade, and Red Alert).

As to the rest of the palette, 7 percent employ a shade of gray, a scant 5 percent use the color of money, and only two have selected the down-to-earth brown.

Law firms have more appetite to grant discounts, provide extra services, manage staff strictly, and make other concessions on typical matters if they see the possibility of a feast in the future. “We’ll diet now, but somewhere down the road let us gorge.” The firms that agree to price breaks and extra services now want to have rights of first refusal or very favorable consideration for the mega-merger, the billions-at-stake lawsuit, the global patenting project or whatever causes them to salivate.

Continuity of the key players at the law department makes a huge difference for those firms. The same person who cuts costs has to be in the decision-making role when the big one comes. What is more, law firms must believe that person will still be there, will still remember the lean past, and will invite them to the banquet.

Scientists of many stripes have long debated the relative contributions to a person’s self of genetics and environment. Analogously, law departments go back and forth on whether the firm (environment) or its lawyer (genes) determines the retention and continued use. Law department managers usually espouse the view that they hire the individual lawyer, who brings with him or her the infrastructure of a firm (See my post of June 12, 2005 about GCs favoring big-name firms for career-influencing matters.). I too side much more with genetics, the lawyer.

So do partners in law firms, who lateral from one firm to the next as they proclaim the size of their “book of business.” If those traveling minstrels did not believe that their corporate clients would buy a ticket for the next show, and if the law firm wooing them did not believe that – if either side thought the environment (the former law firm) held more of the loyal client fan base – we would see less inter-firm movement.