Making the Cut
What do corporate clients look for when they decide to send out legal work? How do general counsel identify potential candidates for their elite preferred provider list?
An eager group of attendees recently listened to a LexisNexis teleconference consisting of a panel of in-house counsel speaking to those very issues. Panelists shared their insights regarding their dealings with outside counsel on topics ranging from alternative fee arrangements to diversity.
No More DetractorsAcross the board, general counsel place a premium on firms that understand their businesses, both inside and out. “Today’s GC has to work within the company’s economic environment and operate the law department as a cost center,” notes moderator John Lipsey, vice president, corporate counsel services at Martindale-Hubbell. “They need law firms that recognize this and manage the relationship from the same perspective.”
Panelist Andrew Rak, senior vice president and general counsel for Reed Business Information in New York, adds, “As general counsel, you’ve got enough detractors as is—including opposing counsel. Ideally, the firm’s engagement partner knows the business and knows which attorneys to assign to my matters. That’s how you end up with the best legal advice.”
Built-In SuccessWhile the paradigm by which corporate counsel select, manage and retain an outside law firm continues to evolve, cost control, budget predictability and demonstrable value are fast becoming the rule rather than the exception. To attain a greater degree of cost certainty, in-house counsels increasingly rely on alternative fee arrangements.
“The traditional billable hour works if there’s a question and the firm is providing advice and counsel,” says panelist Lorraine Koc, vice president and general counsel at Philadelphia-based retailer Deb Shops. “But if it’s a litigation matter, or we’re negotiating a complex deal, I want a success factor built in.”
“If the project is scoped out and noncontentious, I like the fixed fee,” adds panelist Nancy Gardner, executive vice president and general counsel at Reuters in New York. “Say you need a 50-state review to determine whether a certain legal point is enforceable. There’s a definitive scope to the project and the firm should be able to put a price on it. That gives us the budget certainty we need.”
For Gardner and for counsel in many companies today, the buck doesn’t stop there—diversity plays a major role as well. “When we established our panel of [preferred] law firms in 2004, we put diversity in both the RFP and the retaining letters,” Gardner says. “We expect a diverse team to work on all of our matters. We see it as a reflection on Reuters.”
People, Not FirmsSo how does today’s busy general counsel find their law firms?
“I hire lawyers, not law firms. There are great law firms here in New York with mediocre lawyers, and relatively unknown firms in Iowa with great lawyers,” says Rak. “As GC, it’s my responsibility to figure all that out. How do I do it? I talk to people.
I attend seminars and conferences. You have to spend time with people and talk to them to know who’s out there.”
Gardner is also open to firms looking to market themselves through CLE seminars. “If a firm wants my business, a brochure won’t do it. It’s not about them, it’s about me,” Gardner says. “But I’m certainly open to a firm-sponsored seminar. It gets them in the door and lets me see how good they are.”
Personal referrals are still the order of the day, although that process is changing. “A personal reference is still the beginning, but it’s no longer the end,” Koc says. “Once I get two or three references, I go to sources like martindale.com for further comparisons. It allows me to examine candidates in a more neutral way, as opposed to visiting each firm’s Web site.”
Sometimes Koc checks with counterparts at other companies. “I ask them to contact their outside counsel and to have them include lawyers not in that particular firm. Or, I contact non-lawyers. I know a number of insurance and risk management people who usually have good legal references.”
Regardless of how they meet or that economics will continue to drive corporate and outside counsel relationships going forward, managing dollars and cents alone does not make a relationship work.
“The law firms that are winning work proactively with their clients,” Lipsey says. “Traditionally there’s always been some degree of tension between what the GC and the law firm feel needs to be accomplished. But law firms are beginning to realize the more cooperative they are, the more fruitful the relationship.”
Last updated -23 January 08