January 5, 2015
Recently Thomson Reuters hosted Leadership Council, a bi-annual event in which a cross-functional group of C-suite executives, including CMOs, CIOs, CTOs and others from large law firms and companies are brought together for a series of presentations and panel discussions. During panels, GCs, OGC executives, and Risk/Compliance heads share challenges and frustrations with their outside counsel, resulting in some great insights into everyday issues of in-house counsel, including the challenges their companies face, and where their outside counsel are falling short in terms of service delivery.
As part of the Leadership Council, senior OGC members from three major organizations addressed client service expectations and priorities and provided their perspectives on contemporary and future in-house counsel challenges. Participants included the Global Executive Litigation Counsel of a large Industrial and Technology conglomerate, the GC for LATAM of a Fortune 500 Financial Services institution and the EVP of Legal Affairs of a major US Sports organization.
Key takeaways for General Counsel included:
GCs Demand Greater Business Acumen, Client Knowledge & Diversity From Firms
Business skills and acumen remain a key demand that GCs are making of their lawyers. One GC spends 50% of time on business issues and the rest on legal issues so he needs lawyers who can understand his organization and the unique nature of professional sports. The organization hires business people with a law background to deal with PR, legal issues, and ethics, and wants those skills reflected in his outside counsel.
Ultimately firms want advice, not legal know-how. To provide this “you need to know what we do and how we do it” shared one leader. Lawyers must therefore not only understand business, but more specifically their clients’ business, inside and out. Lawyers (and their teams) should sit down with their GC clients for a couple of days to learn about their organization in detail.
Diversity is another aspect GCs are looking for in the firms; diversity in the legal team that represents them, which promotes diversity of thought and ideas.
Hiring the Firm vs. Hiring the Lawyer
Interestingly, the panel brought contrasting perspectives on how Corporate Counsel select their law firms. One of the GCs doesn’t hire firms, but hires lawyers – specifically those with business skills and diverse perspectives. On the other hand, another leader preferred to look more holistically at their providers and hires the firm, not the individual practice. That GC mentioned a preference to get a “firm view” rather than lots of points of view from different practices. It was also mentioned how internal partner politics should be made opaque to the client of the firm – meaning that the clients shouldn’t be forced to navigate the firm to speak to the right people. Too often the best people to speak to about a particular issue aren’t made available because of “politics” (origination credit, fear of losing a client, etc.) and this is very frustrating. Interestingly, firms with lockstep compensation (UK Magic Circle and a few US firms) tend to provide a better overall experience versus firms with an “eat what you kill” model because of the removal of some of those political issues.
Need for Stronger Knowledge Management
Knowledge Management is an issue that most OGCs struggle with and outside firms can help alleviate this burden. But to do so they need to get better at taking away value from each engagement, i.e. ‘what have they learned that can be applied to the next case’? When clients approach their outside counsel with an issue, a response they often hear is “we will put a team together and get back to you,” which is becoming, as the GCs indicated, a less and less satisfactory response. The feeling is that firms have likely dealt with similar client cases in the past and should use the learnings from the past to save time now. This would also allow outside counsel to provide a summary of what is possible before they dive in with the entire team. Corporate counsel want their lawyers to be pragmatic.
Don’t Let Great Get in the Way of Good
The speed and style in which advice is delivered was also discussed on the panel and highlighted a fundamental disconnect between what clients require from their outside counsel and what firms are delivering. Clients often need immediate responses – “by text if necessary” says one panel members – not forty page formally vetted memos that take time to deliver. The message delivered by the whole of the panel was “don’t let great get in the way of good.” Corporate counsel don’t always want gold standard, sometimes timeliness is more important, and accordingly firms should address clients’ appetite for risk upfront. What many clients require is rapid, but sage advice with succinct recommendations – a memo that takes a long time to produce is not always the right answer. As one GC pointed out, “…if I’m calling you at 7:30 AM on a Saturday, I’m not looking for a wonderfully researched memo on Monday, I need something now…”
Leveraging Collaborative Technologies for Better Service Delivery
The panelists encouraged firms to make better use of collaborative technologies to enhance service to their clients. One example was big litigation cases where the GC is sometimes required to send her firm documents for review one at a time via email instead of having a document repository set up by the firm. This is highly inconvenient, as file size limits often result in having to send multiple emails with separate attachments. Similarly, using other collaborative technology solutions like video conferencing would replace putting a team on a plane.
Alternative Fee Arrangements
AFAs remain a big issue for clients. Some organizations are under pressure to use more of them, although price is not always the main issue – the lowest cost provider can get in over their heads and cost more in time and money down the line. Low-balling never works well for either party, with the law firm making no money and ultimately resulting in a strained relationship with the client. Clients want the set-up of the AFA to be mutually beneficial, but if the firm quotes a set fee they will hold them to this. Often AFAs do not end up being what was promised in the beginning.
One GC commented she would like firms to run shadow billing so that AFAs can be evaluated against the traditional billable hour to show a better outcome on the case.