Articles Posted in Outside Counsel

Based on my consulting impressions, general counsel are not all that enamored with cross-selling by partners of a firm they have retained. (By the way, I define cross selling as an effort to persuade a purchaser of one kind of legal services to try the firm on another kind of legal service.) That tepid reaction by general counsel expressed, I am sure there are some general counsel who appreciate being told about a wonderful, smart partner at the firm who could do a fine job on some work that now goes elsewhere. For the most part, however, the occasional times when a law department looks beyond its stable of relied-on firms, the general counsel and managers know how to find additional talent; they don’t want to be sold to before they feel a need.

This view may not be supported by others, so let me know the countervailing considerations on cross-selling (See my post of Aug. 13, 2006: to law firm partners, “client satisfaction” means cross selling; July 20, 2007: value of “multiple practice areas” in law firms may suggest cross selling; Aug. 23, 2007: success of cross-selling depends on view of firm as a whole; Aug. 5, 2007: incentive for firms not to shortchange you under fixed-fee arrangement; Dec. 3, 2005: danger sign if relationship partner tries to foist under-used lawyers; Feb. 5, 2009: drop off in work may increase urge of partners to cross sell; and Feb. 18, 2009: firms should market more [Bruce Heintz].).

Jordan Furlong writes clearly and persuasively about three telling reasons why general counsel haven’t sharpened their cost-cutting knives. Midway through he summarize his reasons: “I actually think the first two reasons account for most of the problem: GCs are under-incentivized and overburdened by distracted bosses. But even if and when those issues get resolved, we have a third obstacle: in practical terms, how do you rationally reconfigure the legal services supply chain without destroying it in the process?” The comments to his post are worth reading also.

Let me offer four other obstacles to dramatic change by legal departments.

1. Nearly all general counsel come from law firms, where often they were very successful as partners, so they know no other business model for firms.

… groaned the GC, commenting on the competition going on between two partners from a large law firm who battled right in front of him for his attention. Each of the two partners wanted the right to be credited as “Billing Partner” and in addition appeared to hate each other with sibling-rivalry intensity.

So in this case, what’s a law department to do? Do you tell them to battle it out alone and then let you know who wins? Do you pick one and let the other one ride? Do you kill them all and let their managing partner sort ‘em out?

When more than one lawyer is meeting with a client, the choreography of such meetings – including the exact roles of each of the players – should be explicitly determined beforehand. And deftly acted out during the meeting. So, maybe the answer is: fire them both, and hire another law firm?

Large law firms will accept smaller assignments if doing so will not conflict them out of larger assignments later. In fact, Corp. Counsel, Vol. 15, Aug. 2008 at 22, states that “more companies are being asked to sign a blanket waiver that allows a firm to represent a client’s rivals or adversaries under almost any circumstances.” I suspect that the tidal wave of economic misfortune has taken that demand off the table.

A post on Adam Smith, Esq.,reminded me of the often-mentioned practice of some law departments to hire firms expressly to knock them out of representing a competitor. Although perhaps more urban legend than fact, this deliberate practice flies in the face of convergence. It also raises the question of when a law firm ceases to be in conflict if a client has not used them for a time.

The minimum position a general counsel should take is that the firm will not take on matters substantially related to the matter for which they are representing you. A further non-negotiable would be that the law firm not bring a law suit against you. Other than those two requirements, it is understandable why a large firm would not want a small matter to preclude them from representing other clients in your industry (See my post of April 20, 2008: conflicts of interest and 24 references cited.).

This was one of the questions Paul Boynton asked me on a recent podcast. My response was “no, but that is an interesting possibility.”

As I thought about it later, there is no reason a general counsel can’t ask a responsible partner who does a lot of work for the company to explain (1) what the firm has investigated about offshoring, (2) why offshoring would not help lower costs in a matter, and (3) what could be done to integrate offshoring into similar matters in the future.

Such a series of questions don’t intrude as much as some of the beyond-the-pale interventions in law firm management (See my post of Aug. 4, 2008: interventions with three posts and 40 references.).

… requested the GC, explaining that one of the roles of the relationship partner is to act as a talent agent to introduce the firm’s rising stars and up-and-coming practice areas. But I thought that law departments were tired of the constant sales pitches and cross-sell attempts made by their law firms?

Most major law firms are huge repositories of legal talent – men and women with deep knowledge about many rarified legal issues. But like going shopping in a multi-story department store, getting a look at all of what you might be interested in purchasing could take some considerable footwork. And sometimes, you might not even be aware of what you want until you see it!

So, whereas cause usually precedes effect, sometimes becoming acquainted with the effect (read: a gifted lawyer) can result in your creating a cause célèbre.

Law Department Management Blog welcomes as a guest author leading law-firm consultant Bruce Heintz. Bruce has written five posts which will appear in the next few days. Each begins with a pithy quote from a GC that raises a particular law department management issue. Next, Bruce asks readers a question regarding the issue and closes with his observations.

“When We Squeal, They Try to Make Us Happy”

… exclaimed the GC, complimenting the relationship partner from one of the company’s primary law firms. But do law firms, in general, respond quickly and emphatically enough to a law department’s concerns and complaints?

Alex Arato, associate general counsel of CA Inc., recently described his law department’s RFP process. As reported in InsideCounsel, Jan. 2009 at 58, Arato solicits around five to seven firms for proposals on individual matters. That number makes sense (See my post of Oct. 26, 2007: seven tips for more effective RFPs.).

Surprisingly to me, since I have done more than a dozen competitive bids, Arato feels that “The hard part is trying to figure out which firms to ask to bid.” He always tries to select some firms that would be new for CA to use, which is a good practice (See my post of Aug. 13, 2008: 8 tips on RFPs.). He attaches information about the lawsuit and expects responses within about 10 business days (See my post of Sept. 28, 2008: twelve weeks for RFP process.). Among the important criteria he evaluates are cost projections and alternative billing arrangements.

ITV, the public broadcasting network for TV in Britain, slashed the number of external law firms it uses from almost 50 to nine, according to Corp. Counsel, Vol. 16, Feb. 2009 at 52. Moreover, group legal director and general counsel Andrew Garard selected the nine firms for three-year terms and “None of the firms will bill us with reference to a measure of time on any matters.”

A brave claim and I hope Garard can pull it off. All of the firms are large and well-known, so this blog, at the least will watch for how the experiment works out.

Karen Kaplowitz of The New Ellis Group issues periodic newsletters, one of which contains several suggestions for how law firms can improve their RFP responses. Three of them would be good for your law department to suggest to the firms competing for your business.

Answer each question as briefly as possible. This will help your team review many responses from law firms and score them (See my post of Feb. 6, 2007: weight the components of law firms’ proposal; and Dec. 18, 2006: technique to evaluate competitive proposals.).

Tailor bios of the lawyers likely to work on your matters so that they describe only the relevant work the lawyers have done.