by Virginia Smith and Paul Tyler
As a profession, the practice of law is both a business for the lawyer and a service to the client. Depending on the practice and point of view, the lawyer may order these attributes differently, but care must be taken to balance them to avoid the inherent conflict of interest with the client who sees the lawyer as their advocate providing effective and efficient low cost service first and foremost. As with any service, the client expects the relationship to be a sort of professional friendship with the most important aspects being trust and good communication. The client wants to know that the lawyer has his/her every best interest in mind, including issues relating to billing, efficiency, competency, and ethics. Corporate clients with in-house counsel on staff present additional challenges. For most businesses, legal issues come with the territory, and managers quickly realize that in-house staff attorneys can do much of the routine and specialized work cheaper and more efficiently than outside counsel. When legal needs exceed staff resources, in-house lawyers act as purchasing agents for the selection, hiring, managing, and directing of outside counsel. What follows is intended to provide insight into the thinking that goes on when in-house corporate counsel retain outside counsel, highlight the expectations that in-house counsel have with regard to their outside attorneys, and identify areas where these professional relationships can be improved.
Larger companies use many different law firms based on geographies and expertise, and outside counsel should not be offended by that. Be gracious in encouraging quick calls from in-house counsel to field questions. Provide a sounding board for us. When you start getting unexpected calls out of the blue for quick advice on an issue in your area of expertise, you should know that you have become valuable to the in-house lawyer in a way that will likely lead to additional legal work down the line. You are providing expertise that cannot be efficiently maintained in the corporate law department on a permanent basis.
Many companies now require every attorney/law firm to be vetted through a vendor management process that might include a Sensitive Information/Non-Disclosure Agreement (“NDA”) and a W-9 certification of the vendor’s taxpayer identification number. Most large companies have sophisticated vendor retention and tracking processes with which vendors must comply. The company may be under strict regulatory restrictions with regard to what the NDA requires of the company’s outside vendors. You may need to sign the NDA in order to continue to get work from the company.
First and foremost, there can be no surprises. Outside counsel must advise in-house counsel early on of the potential for bad results as well as higher than estimated costs and deadlines that may be missed. It is not possible to over communicate. Clients need to be kept apprised of every significant potential impact or outcome that may be encountered as a result of being involved in the matter at hand. These issues could include potential adverse judgments or other financial impacts, damage to reputation, the sheer length of time the client may potentially be embroiled in the matter, the extensive costs and fees that could be incurred, and fines or even criminal impact. As in all relationships, good communication prevents misunderstandings and the resulting hard feelings that could negatively affect the representation. This expectation goes both ways. Encourage in-house counsel to give you explicit, unambiguous direction of what they want and expect on a specific project and from you generally so that what you produce will be what is desired. This helps avoid the write down of your bill for your work due to dissatisfaction with the final product.
Act like we are your most important client. Treat us like our work is your highest priority. Delay or neglect is the number one reason given for most complaints against attorneys, and yet this is the easiest way to keep your client happy. It is so simple! Making the client feel that their case is important to you will go a long way toward a successful representation and repeat business. Be available on a moment’s notice. We enjoy the more balanced lifestyle of an in-house position. You may get a call at 5 p.m. on Friday afternoon. Show that you have our back and that you will be there to support our every need. We expect you to promptly return phone calls or respond to inquiries. Few things aggravate us more than having our calls or inquiries ignored. Establish clear agreements regarding completion deadlines or timelines for longer projects. Perform timely and keep us apprised of schedules and timing. If you are unlikely to meet a deadline, advise us in advance of the deadline passing.
Be Cost Conscious
Often the biggest source of stress for in-house lawyers is anxiety about the mounting fees and costs. Companies take several actions in an attempt to control costs, including requiring budgets and/or cost estimates from outside counsel, implementing RFP bid processes to select law firms on large cases/projects, scrutinizing invoices, regularly reviewing cases, exploring alternative fee arrangements, and ramping up internal legal expertise to contain costs. In-house counsel are typically held responsible for managing outside lawyers and are accountable when the bill is out of proportion to the results achieved. In-house lawyers have to be clear about their expectations and outside lawyers must be careful not to exceed them, but often expectations about the fees and costs are not addressed until it is too late. The best practice is for outside counsel to not incur a large bill without setting proper expectations up front. Nothing is more damaging to the relationship than arguing over the bill and having to write it down. If the client requests an initial litigation plan and budget, it should be forwarded as expeditiously as possible. If you have a budget, either stick to it or obtain permission to exceed it in advance. Budgets can and do change for legitimate reasons. However, outside counsel may be asked to help the in-house lawyer explain to management why the extra costs are justified.
Status letters should be sent at regular intervals of not less than quarterly if there is activity in the case and more frequently should events warrant. These letters should contain updated assessments as to liability and evaluation of damages, as well as any proposed change in strategy, anticipated discovery or costs. Staff the project appropriately and provide staffing continuity whenever possible. Companies are always looking for billing discounts, so feel free to take the initiative to offer discounts, especially when you get a lot of work from a particular company. Negotiate creative billing arrangements (fixed fee, blended hourly rate, contingency fee). Should your firm desire to change any established rates or costs, such changes must be submitted to and approved by your client before they are scheduled to go into effect. Billing rates charged to subsidiaries and affiliates of the company should not exceed current rates applicable to the company. Outside counsel should consult and obtain the approval of the responsible in-house attorney prior to obtaining the services of third party consultants. The client may be able to provide or obtain such services more economically. In litigation, use document review vendors, where appropriate. Do not overkill a case, i.e. no excessive research/unnecessary memos. Just because a client wants to prevail does not mean you should file every available motion, especially those with little chance of success.
Be Right and Give Clear Advice
Do high quality work. Identify issues and advise appropriately, but make sure you understand what the client wants. Companies have lots of choices when it comes to outside counsel and you need to give the client a reason to have faith in your advice and work product. Be honest with yourself about whether your law firm has the expertise and staffing needed to handle the service being requested. In-house counsel expects the firm to volunteer its candid assessment as to whether the potential referral matter lies within the firm’s areas of expertise and whether it can be handled economically and efficiently, given the firm’s capabilities, current work volumes, and staffing levels. Practical, usable advice is always appreciated. In-house counsel want help in solving problems. Lengthy, rambling, expensive research, opinions and advice serve no one and foster distrust. If a project regards a matter for which there is likely no definitive response, discuss with in-house counsel whether they want you to turn over every stone or whether something less will suffice. Offer in-house counsel viable alternatives. Give recommendations along with a disclosure of risk. Keep in-house counsel abreast of important issues and protect their interests. For the most part, the newsletters that firms send out updating clients about changes to the law or important court decisions are highly valued as tools used by in-house counsel to keep well informed.
Tell in-house counsel if their case is weak. Outside counsel must retain independence and objectivity and freely express their views. Don’t be afraid to tell in-house counsel when the likelihood of success is small or the cost of a matter is excessive relative to its size. In most of these cases, it makes sense to settle early. Propose alternatives to litigation (ADR). Do not wait too long to enter into serious settlement discussions. Companies seek outside counsel proactive in timely and efficient problem resolution. In-house counsel should be notified immediately of settlement opportunities. Exploration of settlement in early stages of litigation is beneficial. Requests for settlement authority should be transmitted to the responsible in-house counsel, who must authorize all settlement discussions.
Know Who The Client Is
There are two sides to this issue. First, you should learn all you can about your client’s business, strategies, policies, and corporate culture. The better you understand what the company does and how it operates, the better you will represent the company and the more comfortable the company will be to seek your counsel. You need to understand the difficulties and risks the company is facing. You should understand that there has been a shift in the regulatory environment for many companies. Show the company that you “get” what it is dealing with.
The other side of “knowing” your client is to understand that in-house counsel are your client and they alone are authorized to select, hire, manage, and direct you, unless you are directed otherwise by in-house counsel. Do not undermine the in-house lawyers. They are in the best position to determine the organizational hierarchy within the company necessary to administer the case. Do not accept work referred directly by an employee outside the legal department without prior approval of in-house counsel or a senior company officer.
Conflicts of Interest
Always bring potential conflicts of interest to the attention of in-house counsel immediately. Attorneys are expected to have sophisticated systems to identify potential conflicts of interest. In-house counsel understand that your work with their company can tie up your law firm regarding accepting other work and that many conflicts are more technical than problematic. Most of the time, potential or theoretical conflicts will be waived once the client has been properly advised, but nothing is more offensive to the sense of trust than for a client to find out later the firm is dealing with a competitor, representing an adverse party, or suing the client in another context. Remember that companies may have subsidiaries and affiliates for whom outside counsel may not have directly performed legal work, but which probably ought to also be listed in your client database so that potential conflicts of interest can be easily identified. If the company declines to waive the conflict, it is probably because in-house counsel is aware of a dispute that could arise with the other party that may create problems for the company.
Protection of the Attorney-Client Privilege and the Work Product Doctrine
Protection of the attorney-client and work product privileges is a priority consideration to in-house counsel in referring work to outside counsel. Firms are expected to have established policies and procedures which will assure adherence to these privileges. Firms are expected to familiarize themselves with, and conform to, the company’s procedures for identifying and preserving corporate confidences. All steps must be taken to protect and preserve the attorney-client and work product privileges.
Recognize that in-house lawyers often have extensive experience in various practice areas and are uniquely positioned to collaborate with outside counsel. Partner with in-house counsel. Do not be afraid to call on that knowledge and expertise or the knowledge that in-house counsel has of other departments as you do work for the company. Be flexible and creative in the degree of in-house counsel involvement. This collaboration can range from litigation management of outside counsel, to attorney work share, to in-house counsel doing the majority of the work on the case with outside counsel acting in an advisory role. Let in-house counsel help to develop strategy and budget. In-house counsel will determine what level of involvement they want to have. Copies of all letters, pleadings, motions, briefs, and memoranda should be sent to the responsible in-house attorney. Do not be offended if in-house counsel edits your work. Hopefully, together the work product will be improved. Send all such documentation in a format that can be edited within a reasonable time to allow a meaningful review. If time does not permit this, the outside attorney should orally outline the strategies and objectives prior to filing. In any matter that may eventually be litigated, work with in-house counsel as early as possible to determine whether a litigation hold is needed and, if so, to put one in place. Use in-house counsel to assist with litigation holds, the collection of documents, and interviewing of company employees.
In conclusion, the most important way to gain the trust of in-house counsel and earn repeat business is to accurately perceive, interpret and accommodate our needs. That means being responsive to a fault, business oriented and problem solving in your approach, and as efficient as you can be in achieving those goals. During the course of representation, it is essential that you manage our expectations and inform us of significant impacts and exposures so that we are not surprised. If you do these simple things, we will come back time and time again and not only become your clients and colleagues, but your friends as well which creates the foundation for a satisfying, successful, and long lasting relationship.