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Renato Pontello

Getting a larger piece of the legal pie

Identifying the appropriate equilibrium between the responsibilities of in-house and external counsel is usually a function of the nature of the client’s business, challenges, resources, organizational chart, competitive advantages, and other like criteria and a determination of which legal professionals are best equipped all around to address them.

Perhaps “responsibilities” is not the best choice of words because, notwithstanding the fact a particular role has been farmed out to external counsel, in-house counsel remain ultimately accountable to ensure the role is appropriately filled and executed on an ongoing basis, and changes are made as needed.

The “X” is typically on the general counsel’s back, since he or she has overall responsibility for all legal matters, to find the right equilibrium. In addition to these practical case-by-case considerations, it is handy to be aware of generic factors that affect the relationship between in-house and external counsel and play a large role in determining which specific responsibilities are assigned to external counsel, and how the legal pie is carved up.

Staffing

Firms, in my view, should be frank in regard to their strengths and weaknesses. A thorough due diligence on the firm will reveal what those strengths and weakness are. A firm that maintains it has specialized competence in a field where it is clearly lacking or brings forward a lawyer lacking the appropriate experience and skills will lose credibility.

Firms should focus on time efficiency and how to improve their chances of getting the work they produce right the first time around. Too often I have seen partners who are involved in the initial discussions surrounding a new mandate pass the work on to others in the firm where important objectives are miscommunicated, and the resultant work product, such as a draft contract, misses the mark.

When the baton is passed it should be done crisply, and if there is any doubt on the partner’s side he or she should oversee the work, or review it before it goes out.

Matters should also be appropriately staffed in terms of billing rates, skill level, industry knowledge, and other considerations such as availability. A personal pet peeve of mine is accounts that lack detail in regard to which lawyer performed specific aspects of the work. Detailed accounts can be important evaluation tools concerning whether value was received, and the matter was appropriately staffed.

Turn the meter off

Firms should visit clients’ premises, understand their environments, spend time building a relationship with the decisionmakers, and most importantly understand how strategic and operational plans are monetized, because corporations should after all have one primary objective: creating shareholder value.

Trade journals, annual reports, prospectuses, analysts’ reports, and the like provide important insights with regard to the legal support your client needs to be successful. Take advantage of face time with your clients by asking penetrating questions with regard to matters such as opportunities to increase market share, eliminate competitors, raise prices, reduce costs, improve liquidity in its stock, etc. I rarely visit a client without walking away with one or two new files, falling out of such discussions.

Be strategic

The most valuable set of inputs I have received from external counsel over the years has tended to be trending information. External counsel sees a high volume of transactions cross their desks. Inputs relating to new creative business models, financing vehicles and sources, tax plans, risk mitigation, and other such nuggets can be invaluable, and translate into millions of dollars of increased profits or cost reductions.

Firms’ marketing departments can play an important role in cultivating the skills necessary to plan strategically as part of a lawyer’s onboarding, and to existing lawyers on an ongoing basis. In progressive firms, chief marketing officers are often made responsible for assembling such information and making it available to lawyers within the firm, as well as compiling other tools such as client interview questions designed to position lawyers into becoming strategic partners with their clients.

Be pragmatic

It is not enough these days for a firm to focus on technical abilities. You are more likely to get kudos not for drafting the perfect agreement (especially risky in the face of a tight deadline) but for your pragmatism, including your business judgment, and in right-sizing your agreements.

Decisions need to be made by clients within a human context so it is important to understand the client’s culture or personality, as well as competitive advantage. Understanding the context will better ensure your recommendations are well-grounded, responsive, and useful. In many deals it may be imperative the transaction closes quickly, so agreements need to be user-friendly, concise, and hit their mark in draft one.

If your client has a first mover advantage you may be doing it a disservice by trying to dot all the “i”s. Business judgment will sometimes mean assisting your client to weigh the advantages which would be achieved in dotting the “i”s over losing the beachhead your client has established. It has been my experience firms fare badly in synching up with their clients as far as pragmatism goes.

Learn from IT departments

Law firms, the airline industry, and other service-oriented organizations would do well to pay attention to the manner in which IT departments service their clients. When a problem arises, a ticket is opened, the client is provided with an estimated response time, and the client receives regular updates.

Responsiveness is critical to securing a larger piece of the legal pie from in-house counsel. Proactive, leading-edge firms will acknowledge incoming work, provide an estimated time for completion, and have a relationship partner check in with the client as the work is being carried out. This affords external counsel the opportunity to impress upon the client the firm is dedicated to finalizing the mandate, it genuinely cares, and is in the trenches alongside the client, around the clock if necessary.

Take nothing for granted

As in many things it is important to not become comfortable with the firm’s relationship with a particular client. A misstep or two can wipe out years of accumulated goodwill in the competitive legal world.

Firms should show appreciation for being selected, and continue to nurture their relationship through regular contact with the client’s legal and executive team. Firms that hold onto a large part of the legal pie or are able to grow it demonstrate they genuinely care, invest in the client, bring passion to the table, share trending information on a timely basis, and ask pointed, insightful questions such as, “What keeps your CEO or your CFO up at night?” and develop creative ways of addressing those concerns.


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