Legal costs over-control?
March 14, 2008 | Filed Under Cost Control, Compliance
Is there an excessive emphasis on the control of legal costs by some in-house departments?
George Terwilliger of Wise & Case wonders and writes about this in the National Law Journal.
Mr. Terwilliger sees a troubling trend in certain cases:
Today, however, the corporate discussion seems to be shifting from “How much does it cost?” or “Can we do it in-house?” to “Can we do without it?”
Two examples given of this potential short-sightedness are avoiding plaintiff IP litigation and potentially cutting corners on FCPA compliance.
These are two clear high-reward, high-risk areas. The legal department can become a revenue center with the right case and effective IP counsel. On the FCPA front, many companies learn the hard way that the global sales bazaar is not always an easy place to navigate.
Mr Terwilliger rightly notes that in-house departments have to have a proper focus on costs, and that the CFO often demands it.
All good so far, but one comment caught my eye:
That said, however, in a very real way, companies tend to get what they pay for when it comes to purchasing legal services. Companies benefit most from legal advice based on specialized training, expertise and judgment gained through long experience.
All true, when talking about a certain team at a specific firm. The challenge for the GC and other managing counsel is to make the right match. Rare are the firms that have the needed expertise that justifies premium rates across all practice areas.
I think I’ve said somewhere before that cost does not equal value. In some cases the services may be overpriced; in Mr. Terwilliger’s case, heading up the white-collar practice group at a major firm can make his hourly rate a relative bargain.
Today’s GC should definitely not skimp when it comes to necessary support from experienced and service-oriented outside counsel.
But given the depth and breadth of outside legal costs, the focus on control is there, it’s increasing, and it ain’t goin’ away. This raises many challenges for law firms that I’ll save for another day.
I must say right here that I see this trend causing enlightened law firms to look hard at what they offer and who they have doing it. They may find in some cases that they are at a fork in the road.
It may closer than some think; sort of a legal off-ramp?
Legal Directories: Insight or Indulgence?
March 6, 2008 | Filed Under Law Firm Marketing, Selling the GC
UK publication LegalWeek has an interesting reflection on the usefullness of legal directories. That is, those large books from Martindale or Chambers, or new entrants like LawDragon or Superlawyers. (Martindale has even commented on this subject in a corporate blog).
The article focuses more on Chambers, given its HQ in London. They do have a good website that supports the hardbound editions.
According to the article, the jury is out whether they hit their intended target: helping inside counsel find and eventually retain outside counsel.
A common (and thankfully honest) viewpoint comes from Shell legal head Richard Wiseman:
“I use them very, very rarely,” he says. “I have the luxury of being able to consult with colleagues on the question of which outside counsel to speak to. I am horrified by the amount of money that firms spend on preparing submissions to these directories. I cannot imagine who they think is naive enough to use a directory in any other way than they would use the Yellow Pages.”
These directories serve some purpose, but their influence is more like a citation from a Louisiana state court in a legal brief. It’s better than nothing, but in my experience only in limited cases (such as a foreign jurisdiction or a minor matter for local counsel).
Article author Michelle Madsen does a good job of covering the waterfront here, but loses me a bit at the end:
It seems telling that US general counsel, who are renowned for having greater status, and are more likely to feel secure in their position than their European counterparts, seem less grudging in acknowledging the role of directories.
A cynic could even argue that in-house lawyers have an interest in maintaining the mystery around law, which directories threaten to pierce.
Huh?
I can’t think of any mysteries about the law that could be pierced by anything resembling a legal directory. You could perhaps pierce a sheetrock wall by flinging a copy of the latest Chambers US directory at it, however.
If by mystery Ms. Madsen is referring to how in-house counsel find and retain outside counsel, why yes, that is an interesting one. If only the best directory entry was the key, like a winning Ivy-league admissions essay.
Surely Ms. Madsen shouldn’t expect inside counsel to reveal all the secrets of law firm selection. Why there are championship courses to be golfed and Broadway shows to be taken in, for gosh sakes!
Law Firm Governance from the Inside Out
February 28, 2008 | Filed Under Law Firm Trends, Governance
Some firms are starting to recognize that a focus on the marketplace (i.e., client wants and needs) isn’t something that should be relegated to the time left over after a typical managing partner’s day. Especially when the days run long, with a demanding focus on things like hiring, compensation, development and mediating inevitable conflicts (both legal and personal).
Canada’s Financial Post notes that the Gowlings firm has adopted a rather novel way to ensure that client interests don’t get the short shrift.
It has split managing partner duties into internal and external groups, each of whom are on an executive committee with the firm CEO and COO. This committee then answers directly the firm board of trustees, akin to a corporate board of directors.
According to Scott Jolliffe, CEO of Gowlings:
The external-facing group is headed by Jane Steinberg and her committee consists of the leaders of the various practice groups and those in charge of marketing them, which is an added twist on the governance model.
“We’re making a statement to ourselves and the world that managing the external side of our business is just as important as managing the internal side of our business,” he says.
At first blush, this would appear to add to complexity, but there’s a method behind it:
While a second management group for the external side of the business arguably adds another layer of bureaucracy, Mr. Jolliffe stresses that it will allow the firm to better serve and respond to those who pay the bills. “I think it will distinguish us in the marketplace,” Mr. Jolliffe says. “It’s quite unique. We’re pretty enthused about it.”
The picture of large law firms is drawn in good measure by the focus of the legal press on sexy things like starting associate salaries and rising profits-per-partner. This can leave the the client feeling a bit left out. Or like the meat in the sandwich.
Anything that serves as a reminder of the reason there are law firms in the first place deserves at least two cheers.
aLawyer Reviews iPaper
February 21, 2008 | Filed Under Unplugged - Audio, Technology
There’s a new and potentially game-changing technology for viewing files on the web. It’s called iPaper, from the people at the document-sharing website Scribd. The image below is a copy of my 2008 preview that was provided to subscribers of Wired GC - Select.
The technology is free, and I bet a few document-sharing application providers are gnashing their teeth right about now.
An audio explanation is located below this image (it’s multimedia Thursday at the Wired GC). The slider at the far right of this document allows you to scroll throught the four pages.
Just click on the red arrow to hear a short overview of iPaper and Scribd.
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And you can click here for a full-page version.
General Counsel Liability
February 18, 2008 | Filed Under GC Liability, Compliance
The Fulton County Daily Report has an excellent summary of the state of GC liability. The list of those involved isn’t large in an absolute sense, but is growing.
According to Roscoe C. Howard Jr. of Troutman Sanders (and a former U.S. Attorney):
“There was a time, quite frankly, when you could be a director or officer and hide behind a corporate shield. Individuals weren’t held to any law enforcement accountability. Now, if you’re CFO, you’re going to jail. They’re going to turn to their GC and say, you need to keep me out of trouble.”
The challenge of course is that neither the GC nor the legal department can be looking over everyone’s shoulder all the time.
But that doesn’t always matter when the authorities come knocking…
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