“I think for us a big part of what makes a pitch from a law firm successful is making it relevant,” said Paolo Berard, head of legal for Direct Energy Services. “I know that might sound trite, but you would be surprised at how many firms will come in and make very impressive presentations that have very little to do with our business.”
Berard was one of three in-house counsel providing candid advice to law firms and their marketing departments during the Legal Marketing Association Toronto chapter’s annual general counsel panel. Forget hockey tickets and lunches, some firms are gaining advantage over the competition by providing technology tools to assist their in-house clients.
Berard explained how a law firm Direct Energy now works with provided an IP management tool to help the company manage its portfolio of 5,000 trademarks.
“The work was spread out across a variety of firms in North America and we were looking to consolidate that work into a single firm and bring the Canadian and U.S. portfolios together. In our RFP process, a firm offered a web-based tool that allows us to manage everything as a one-stop shop for IP management. It covered everything from trademarks to domain names. We as an organization would never make the capital investment to buy this particular tracking tool. It was the piece that differentiated one firm over another.”
When it comes to the RFP process, Steven Trumper, general counsel at Build Toronto Inc., who outsources “virtually all of my legal work,” said the most important part for him is the in-person meetings once the short list is down to three firms.
“I bring my deal people into those meetings and the chemistry is what is going to make the difference. Do myself and the deal people like the people presented as the team from the law firm and do we think we could enjoy working with those people and develop a long-term relationship,” he said.
Kerry O’Reilly, head of legal for corporate and marketing, and corporate secretary for mining giant Vale, also talked about the importance of law firms understanding the difference between “raw intelligence and emotional intelligence” when putting together a team for an RFP. For her, it’s the emotional intelligence piece, and not just the legal skills that are important factors in assessing what a firm brings to the table.
“Emotional intelligence is the piece that really needs to be worked on in coaching the legal professionals you send out to do these deals,” she said.
O’Reilly told the story of when she first joined Vale and was invited to a hockey game by a firm. She and another female colleague arrived at the event both wearing business dress winter coats that were similar in style — one in red and the other in burgundy.
“We came in and there was a senior associate there I had never met before. His first comment was ‘Oh look, the flight attendants are here.’ That was a really bad move. Luckily for the firm I knew other people in that firm and I had a good relationship with them. I already had an opinion of that firm but if I didn’t I would have left with a really negative impression. That still nags in my head six years later.”
She noted while law firms may be made up of “finders, minders, and grinders,” all should be coached on how to manage clients effectively.
“I think it’s super important to stress that the key role your marketing group plays in the firm is in terms of coaching lawyers, and it’s not just students and associates — it’s the whole range. In this day and age the grinders have to have common sense too because one day they’re going to be in front of a client.”
The panel was also asked by moderator Jean Cumming, editor-in-chief of Lexpert, whether they tend to hire a law firm or a specific lawyer for a task or project.
Berard said it depends on the context of the project at hand and can often be about hiring one particular individual as opposed to the firm as a whole.
“We retained a lawyer nine months ago who switched firms mid-way through our project. She was just so good and so invested in this project there was no question this assignment moved with her to her new firm,” he said.
What doesn’t go over well is when a law firm presents a certain lawyer for the client but then that person doesn’t end up working on the project.
“We have seen the bait and switch, particularly with large U.S. firms that will bring a very senior expert in a practice area into the meeting and then that person disappears on the file. It’s unfortunate and goes to the point of having a relationship with someone you can call and have someone address your needs,” said Berard.
When it comes to fee structures and flexibility in how they bill, the panel acknowledged that firms have been progressive, for the most part, but more work needs to be done in evolving how work is billed in Canada.
“I think the firms understand that fees do matter, in particular with large transactions,” said Berard. “I’ve been impressed with what we’ve seen which is a willingness to negotiate; they’re willing to put skin in the game. I’ve also seen unique and creative solutions around how to build a fee structure that makes sense in the context of a particular file. There hasn’t been as much fee creep as there was when I was in private practice and hourly rates were going up every year,” said Berard.
Trumper said the worst mistake a firm can make is “an unpleasant fee surprise” that comes out of nowhere. He emphasized that effective management of a legal bill by the partner in charge is critical. That means flagging where there might be cost overruns or indicating where a project has moved out of scope and the fees may increase.
O’Reilly said while U.S. firms are doing a good job on alternative fee structures, firms here at home still have work to do on offering discounts on rack rates.
“From our headquarters in Brazil, the policy is that any firm we’re engaging now has to provide us with a discounted rate. It’s a bit of an awkward conversation to have but a lot of firms that are getting to know us better are sending us pitches already with discounted rates. As well, we have to look for value-add. I suggest pushing the conversation internally about providing an upfront discount to the rates,” she said.
Berard told the audience that his department goes through legal bills line by line.
“I won’t hesitate to pick up the phone and say ‘this person has done 12 hours on this memo that was three paragraphs long — help me understand if there was a complexity to this that we weren’t expecting.’ Unfortunately it makes for some difficult telephone conversations but I think they’re important to have.”
And when a project is over, the panel was in agreement that a review after the file is closed is generally better than an evaluation once a year. Trumper noted that is the “exception” when a firm calls to ask how they did.
“I would be open to having something after each project. Once a year means some things might be forgotten,” said O’Reilly.
Too often, there’s no review at all, said Berard.
“I’m shocked. It’s only happened to me once in three years. We even fired a firm and they didn’t even call to ask us why. I was a bit astounded by that. I prefer the more regular review. I do think an annual touch base would be helpful as well,” he said.