UNDERSTANDING THE IN-HOUSE LAWYER
5 February 2001
When a client appoints an in-house legal counsel, how should the firm respond? Is it a threat or an opportunity? A law firm should not fear such an appointment as it rarely leads to less work and usually leads to more, as someone is appointed who recognises the need for legal advice and assistance. After all, most companies with large in-house law departments still make considerable use of external law firms.
It is important for the firm to understand that an in-house counsel's role is very different to that of private practice. Foremost, the in-house lawyer is a member of the client's business team, using their legal skills to promote the interests of the business. On a matter or transaction requiring the expertise of a law firm, the in-house counsel will rarely do it alone, but acts as an interface between the businesspeople and the law firm, managing all aspects of that relationship.
It would be a mistake for any outside counsel to bypass the in-house lawyer and go direct to the businesspeople. In-house lawyers know the business of the company far better than the external firm ever will; they know the underlying dynamics of the company and the requirements of the businesspeople. In addition, the businesspeople expect their own counsel to assimilate external legal advice first. The in-house lawyer is best placed to relay an external lawyer's advice internally.
It is important for an external firm to foster the relationship with in-house counsel. On any deal or matter they will need to work closely together. External firms that succeed in these relationships are usually the ones with a service-focused mentality. They understand the requisite approach to the task and the client's time and cost restraints. So when there is a key issue, these firms will flag it up immediately and not wait for a formal opinion in which the issue may be immersed in details. They understand what is commercially important to the firm.
A good law firm should work hard to avoid surprises for the client, whether on issues discovered late in the day, changes of team or personnel, or poorly managed legal costs. It will have processes in place to accurately estimate and track spend, keeping the client advised at all times. Timely reporting and billing are key ingredients for a happy client relationship.
Getting the right legal team is also important to a law firm's success. The partners of a firm managing the client relationship need to ensure that the appropriate team is assembled for the particular client, that sudden changes in personnel don't occur and that unnecessary duplication and manning is avoided.
A law firm should spend time getting to know its client: in what markets it operates, its customers, key business issues, main goals and objectives and what its financial drivers are. A secondment of staff to the client can be invaluable in cementing such a relationship (if the right person is seconded).
Yes, the law firm may "lose" a lawyer if they fail to return at the end of a secondment, but this should never be seen as a loss, rather as the addition of an ally within the client's organisation.
Work at the relationship with the client and its in-house lawyer. Other valuable services that the external firm could supply are things like shared training for continued legal education, disclosure of precedents and increased digitisation of work methods (extranets, electronic billing etc); all are ways of developing further a successful relationship with the in-house counsel.
Remember - a happy in-house counsel means a happy client.
John Purvis is associate general counsel at GE Americom, a GE Capital business