How Outside Counsel Can Make Life Easier for In-House Counsel
If you can’t keep your clients happy, you aren’t going to keep your clients. When your clients are corporations who have lawyers all over the country handling their business, those clients know exactly what they want, and how and when they want it. You and I need to know those things as well so we can be compliant and make their jobs easier. Outside counsel have the difficult job of managing the litigation and other assignments from in-house counsel. And as important as getting good results is, communicating with in-house counsel is no less so. From where I sit, there are three general categories of communications that are important for outside counsel to maintain: (1) the value of early and accurate evaluations for both liability and monetary value of a claim, (2) the importance of accurate litigation budgets, and (3) the necessity of quality and timely reporting on case developments and compliance with guidelines. Not being entirely certain, I reached out to some of the in-house lawyers in LawyerSmack to ask what was important to them. Initially, I wasn’t sure how willing they would be to share their responses with me, but I quickly received an encouraging general consensus: “I’m not sure I have ever passed up an opportunity to help outside counsel make my life easier. It’s one of my favorite cycles of mutual benefit.” The in-house lawyers I spoke with work in a wide variety of sectors and provided some insightful answers that if implemented, can help outside counsel make the lives of in-house counsel easier and keep them happy so they’ll keep sending us work.
Photo by Jose Zaragoza.
The value of early and accurate evaluations of both liability and the monetary value of claims
BK: Early and accurate assessments for any given problem are key to continuing to get asked the question / assigned the matter. JX: An early case assessment, which is accurate and provides the basis of the assumptions it makes, is very important. We will use that to come up with a risk-adjusted value of the matter. That risk-adjusted number is hopefully going to be directionally accurate due to the early case assessment and outside counsel’s experience in the relevant jurisdiction. (We don’t discount intuition/gut feel from experienced local counsel, but we do need to understand their experience level). That number will inform our resolution strategy and the level of attention we devote to the matter internally. We place an incredibly high value on opportunity costs, so knowing early what a reasonable settlement is adds a lot of value for us. We tend to involve litigators early on in potential disputes, in order to aim at an earlier resolution. We think it works. JG: I think it’s an interesting topic, because I am often very involved with issues that we know will result in litigation. So, I may use outside counsel to help “gut check” my evaluation of liability or value of a claim, but I don’t rely on them much for that. If they disagree with my analysis, I certainly want to know about that, but I haven’t had that situation come up yet. CC: This is helpful but not as important with a lot of in-house litigation. In-house litigation isn’t usually about damages recovery, it’s about maintaining a market position. In other words, you might spend more on a case than you recover, but that is fine because you establish boundaries around your brand/position. Same thing with defending suits at trial vs settling – if a company is worried about setting a bad precedent, it makes sense to spend the money to try to defend. And, although this isn’t something you can really talk about out loud, there is an aspect of “If I keep pushing this I’ll get them to go away as a nuisance cost” and that matters a lot. The other piece is that a surprising amount of in house litigation is ego driven, as in, someone founded a company, had moderate success, and has now tied their entire self-worth to it. Also, they are used to getting their way. So it’s nothing for a CEO to say, “I DON’T CARE HOW MUCH IT COSTS I WANT THESE GUYS STOPPED.” This puts in house counsel is a tough spot – how do you explain to the person that can fire you that the claim isn’t worth it? It’s helpful to have solid outside counsel that will support this, with a solid valuation. But that valuation can’t be just “Well this is an average settlement vs this is an average trial cost.” The better outside counsel understands my business and my market, the better they can advise on things like whether or not this has far reaching implications.
The importance of realistic litigation budgets
CC: This is harder to predict in a helpful way, as it depends on the company. All companies do legal bills differently. I’ve been at some where the legal department had a litigation budget, I’ve been at some where it was a general expense, plus a lot of companies have some insurance policies for that sort of thing. I’ve also never specifically had to make a budget case so I don’t have much experience. One thing I will say is that if you are going to add on fancy things (like a mock jury) you better be able to show an ROI. The other piece is that keep in mind that if you present a budget, in house counsel will take that to the executive leadership and hopefully get approval. If outside counsel blows that budget, then in house now has to go to their decision maker and present this. Basically, you are getting fired ASAP. JX: I don’t place much importance on litigation budgets. I want something which is in the right ballpark and is directionally accurate, so that the business isn’t surprised. As an enterprise, we don’t do much budgeting and don’t see much value in it. Being privately held lets us focus on the long-term value. On any large matter, I will be looking for some type of fee agreement anyways. My current favorite version of those, which was suggested to me by outside counsel, is a flat fee (invoiced monthly) with a risk collar. Everyone has skin in the game that way and shares the same incentives. The last matter I did this on, our risk-adjusted value was re-done about 3 times as we headed to a final arbitration hearing. The legal fees stayed the same in each analysis because we discount sunk costs, and the counter-party did a number of things which made the matter more expensive. The key to this is that I (and subsequently the business) was not surprised. Outside counsel and I discussed strategies, and that discussion always included a note on whether it would be more expensive than we planned. On an original $1.5M fee estimate, the final estimate was $2.3M. The relatively high percentage variance wasn’t a problem because everyone was on the same page.
The necessity of quality and timely reporting on case developments and compliance with guidelines.
CC: I’ll tell you a hilarious story – we contracted a doc review firm to review about a million docs. I sat next to the project manager everyday. We basically spoke throughout the day all day everyday. He sent reports periodically, which I actually opened. Then, one day, my boss asked me to find out what the responsiveness rate was on the docs, so when I got to the review center I asked him. He gave a great answer, talked me through the numbers, what they meant, how they compared to expected, the whole nine. He even showed me a report that laid it out nicely. I said, that’s great, can I get this to share with the team. He politely told me that he sent it every night around 7pm in this nightly email. The point is: I (and the team) expected nightly reports. If we didn’t receive them, we would have been pissed. But we also never read them, and when we needed an actual update, we expected someone to just give us the answer. But we also didn’t want outside counsel to present directly to management. I guess the take-away is, have regular updates going out, but at the end of the day, the client is going to call you to talk through the details. JX: Complying with engagement and invoicing guidelines is surprisingly key to me. I know they are a pain (and that ours in particular are a pain), but it builds so much trust. I don’t want to have to review every invoice in mind-numbing detail. If you show me you are trustworthy on the smaller, less important things, it carries over to the big things. With regard to litigation guidelines and updates, I will generally be very specific about what I want, and it will vary significantly by matter. I will clue you in on who is important internally, and, if you want, I will get you on the phone with them and help solidify that relationship, but I never want to be surprised on that call. We should have already talked about it. Those updates, and the level of detail in them, can be critical to me internally and to getting appropriate authority for resolving the matter. There are some matters that I will just expect updates and will let you run with. There are others that you will essentially have in-house counsel as full members of your team. The goal is for our matter team (in-house and outside counsel) to operate as smoothly as if we were one group. When it works, it is a beautiful thing with better resolutions. That is something that not all outside counsel are willing to engage in, and sometimes it’s simply difficult with competing schedules, but I need to know up-front if the staffing or communication plan has you concerned.
Other Important Issues for In-House Counsel
CC: I know multi-tasking is the way the world works, but every time I was at [Company] and we called counsel, if someone could hear typing in the background, they immediately muted the phone, rolled their eyes and said, “He is double billing.” It’s like in house’s favorite game. Also, don’t underestimate the fact that outside counsel is the fall guy if management decides the case isn’t going the way management would like. In-house will pay outside counsel’s fees because it means in-house gets to blame outside counsel and keep their own job. JG: The absolute most important thing that makes my life easier is early notice of deadlines where you need my help: gathering documents, arranging witness interviews, reviewing things that need my input, etc. The worst situation is when outside counsel comes to me with discovery responses that I need to review, find accurate factual information for, and find someone to verify them, all on the day they must be served. That happened to me on Friday and it was a real last-minute scramble. The best way to avoid it is early and OFTEN communication. Just because outside counsel sends me an email doesn’t mean I’ll act on it right away. I think this is true for most in-house counsel – I need follow up, or it will easily fall off my radar. SZ: It is important for outside counsel to provide “lessons learned.” If something is broken, tell us what is broken that we need to fix. One of my biggest pet peeves was when I’d find out from outside counsel that we had the same exact issue or problem come up several times, yet here we are still litigating it. Outside counsel needs to communicate what went wrong so we have an opportunity to fix it. Learn as much as you can about the business. We often had outside counsel want to settle employment cases with non-monetary relief, like training for a bunch of employees. At [Big Box Store], we needed everyone selling stuff out on the sales floor. Taking time to train people meant hours and hours of people not selling. Most of the time, we’d rather pay money to settle a case than have to train a bunch of people. You have to understand how a business works to know those kinds of things. We had other quirks like that as well. We’d sometimes settle stuff for gift cards. It was way cheaper for us to pay out a gift card than cash. Then you had the added bonus that people would keep shopping at [Big Box Store] because they had a gift card rather than going to a competitor.If you want to make life easier for your clients, you need to comprehend their wants and needs. You have to be willing to have open dialogue. And you need to provide timely and quality communications. As it turns out, many outside counsel are either oblivious or disinterested in meeting their clients’ needs in these ways. They are the reasons we are often referred to as “outhouse counsel.” It doesn’t take a great deal of effort to be a better-than-average lawyer. A little bit of attention to detail and purposefully identifying yourself as client-centric will carry you a fair distance. Intentionally setting about to exceed your clients’ expectations will ingratiate you to your clients and result in long and trusting relationships.
Photo by Jose Zaragoza.