Articles Posted in Outside Counsel

Many times I have referred to in-house attorneys in one country retaining law firms in another country. Several posts consider the challenges of doing that (See my post of Jan. 4, 2006: advice regarding cross-border firms; Jan. 4, 2006: foreign firms charge higher rates to non-national clients; Oct. 19, 2007: how to find foreign firms; Dec. 10, 2007: how to find and retain foreign firms; and Feb. 12, 2006: not a buyer’s market in many countries.).

Other posts look at the frequency of the practice (See my post of Jan. 3, 2007: many major firms in France are American; Aug. 5, 2007: infrequent retention of foreign counsel; June 28, 2009: two domestic for every one foreign firm hired; Jan. 19, 2008: hire two firms in each country where you need counsel; June 26, 2009: external counsel outside your country.).

Benchmarks associated with so-called foreign counsel also appear (See my post of April 10, 2006: whether to count foreign trademark associates as external counsel; Aug. 21, 2005: large numbers of foreign trademark counsel; Aug. 7, 2007: many international matters involve trademark local counsel; and June 26, 2009: perplexities about the term “foreign law firm”.).

A recent survey of general counsel in Europe offers some advice to law firms: “It is pointless to make ‘independence’ the main banner in their marketing, because clients and potential clients simply do not care.” Whether a local firm has joined a larger firm or has continued to practice on their own makes no meaningful difference to general counsel who are shopping (or deciding whether to retain).

The survey was conducted by the Belgium-based consultants FrahanBlondé and is available for purchase; please contact Antoine Frahan. Along with independence, I would add three other putative persuaders that fail to impress general counsel.

One is one-stop shopping (See my post of Jan. 21, 2010: full-service is an empty advantage.). General counsel like to be able to pick and choose.

To continue the wordplay, at least one group of chief legal officers doesn’t buy “one-stop shopping.” The General Counsel Survey 2009 from the Belgium-based consultants, FrahanBlondé, bluntly concludes (at pg. 23) “the General Counsel do not see full service as a compelling argument for working with a law firm.”

Concerns about getting all or much of your legal needs from a single law firm include inconsistent quality across offices, lack of intra-firm coordination, loss of competitive market discipline, different billing methods, and even competitiveness among partners. These reservations are similar to those expressed sometimes about associations of law firms as well as efforts by firms to cross sell services (See my post of Feb. 21, 2008 #2: law-firm networks with 7 references; and Feb. 20, 2009: cross-selling by law firm partners with 7 references.).

The partner you know is better than the promised allures of others; on-target, known services give more value than potential full services (See my post of March 15, 2006: global law departments disparage one-stop shopping.).

A group of 22 legal departments of local authorities in northwest England “is going to set up an online database to provide information on pricing and contacts for the firms and chambers they instruct.” This step moves well beyond what I wrote about three years ago, where only 18 authorities were involved (See my post of June 19, 2006: collective appointed four external counsel.). Information about some 44 law firms and 25 chambers will be available on the secure extranet.

Sharing information about law firm costs among purchasers approaches. As William Gibson famously wrote, “The future is here, it’s just not evenly distributed.”

A long article in Law Bus. Rev., Winter 2009 at 28, describes the relationship between Tyco International and Eversheds. For a two-year term, Eversheds is handling all of Tyco’s more than 1,300 matters across 70 jurisdictions in EMEA.

At the end of the article, the chief lawyer of Tyco’s EMEA businesses “suggests that the way of measuring the success of this unique arrangement with Eversheds is not by the normal gauge: cost is not the correct measure, he says, but rather the number of hours they get for the money, is.”

That statement leaves me puzzled. It would suggest that Eversheds should delegate and delegate, use lots of paralegals, bring in temps and contractors, keep partners out of the fray, and generally drive up the hours provided and down the blended rate. Surely, bulk hours is not the optimal measurement for the success of this sophisticated arrangement.

We all know the canard about two ears and one mouth, but it’s right. When your law department asks a law firm to present its capabilities, whether during an RFP process (an invitation to tender in the UK) or otherwise, tell them how to plan the distribution of their time. Talk some; listen and reply more. The recommendation comes from Law Bus. Rev., Winter 2009 at 40, without discussion.

It is hard for distinguished partners, proud of their firm and capabilities, to stop spouting and to take questions. Even when asked something, they too often go on too long. Not that a selling presentation is a deposition – just give the bare facts and wait for the next question – but neither is it a time for soapboxes and long-windedness. Those who attend from the legal department should interrupt disquisitions and drive for direct answers to the questions that matter. Discussion, creativity, style, and nimbleness during the pitch distinguish a firm far more than PowerPoints.

You could see it coming. “In pitch documents, clients ask what we are doing as a firm on the environment,” says an office services manager at Simmons & Simmons. Here is yet another question on RFPs that may or may not ever make a difference.

As regards environmental efforts, Law Bus. Rev., Winter 2009 at 23, reports that 132 law firms in the UK belong to the Legal Sector Alliance, which shares knowledge about environmental strategies. The LSA has already implemented an accredited environmental management system.

There is likely to be a collective of law firms in the United States that focus on energy efficiency. I have not come across a legal department counterpart.

Dynamics differ when you negotiate more favorable rates with firms you already use significantly than when you negotiate with new firms that want your business. With incumbents, the benefits can come more quickly because they are already handling matters and rate reductions kick in at once. For the same reason – familiarity and entrenchment can strengthen resistance – you might end up with lower discounts. Whereas, a hungry newcomer might concede deeper or better discount arrangements but the payoff lies farther off since they have to be assigned matters and work them before those rate breaks help you.

On a different measure, incumbents know more targets to lobby within your company and can muster more appeals to “look at all we’ve done for you.” Even so, they can probably put on the table insightful cost-saving measures that do not rest on rates. Untested contender firms play the card that they can bring to bear all sorts of talent and you don’t really know whether the attorneys will perform as advertised. Lack of baggage may be an advantage. More generally, the challengers will probably out-market the incumbent.

Not talked about much in the groundbreaking arrangement Pfizer has entered into with 19 law firms is that three of them “have formed a partnership in which they bill Pfizer a single fee.” That quote is all that an article, in Corp. Counsel, Vol. 17, Jan. 2010 at 69, tells us. It struck me as quite an interesting combination of interests and investment. As a collective, they must have presented a compelling story to Pfizer of a virtual firm pre-assembled with meshed abilities, coordinated talent, and shared economics.

The three firms are Bradley Arant (based in Washington, DC), Watkins & Eager (Jackson, MS), and Irwin Fritchie (New Orleans). Oddly, I looked quickly at each of their websites and could not spot any Pfizer news on them.

One of the consequences of convergence, when a handful of firms take on a large portion of your work, is that you probably should engage yourself more in their issues of “bench strength,” succession planning, training, evaluations, promotions, and relationship partners – to name a management decisions of law firms. This heightened involvement follows from the responsibility now vested in those primary firms; you need to protect your investment in knowledge capital.

Grafting a few firms onto your tree brings shade and fruit but also requires more pruning and care (See my post of Feb. 16, 2008: convergence with 26 references.).