“I’m a general counsel and our external lawyers are big on entertainment. Over the years I’ve been to Wimbledon, Glyndebourne and rugby internationals, and a couple of years ago even got taken on a ski trip. But I’m starting to resent the amount of money this is costing since indirectly the costs get passed to me as a client in the end. Having been the recipient of some of this hospitality I don’t want to seem churlish.
How do I get my point across?”
Michael Chissick, managing partner, Fieldfisher
Like many other areas of business, law is very much about relationship-building. So it is not surprising that in a competitive environment, law firms seek to spend time with busy GCs. Some feel the best way to do this is to invite key contacts to marquee events. In my experience these costs are absorbed by the law firm and do not lead to higher costs for a client, just lower profits for the firm. You do not need to accept the invitations.
If your concerns are with the level of fees being charged, the best approach is to have a discussion with your relationship manager about the fee levels and even suggest that if you forego any valued-added services you should have a discount on the fees
“Focus on getting the right pricing structure rather than the costs of entertaining”
Getting the pricing structure that clients are happy with is an increasing complex matter, with a variety of ways of charging such as fixed fees, retainers, capped fees and, of course, the
traditional time and materials rate card. I suggest you focus on getting the right pricing structure and not get too concerned about the costs of client entertaining.
Isabelle Meyer: General counsel Europe, Russia, CIS & Turkey, Moët Hennessy
Law firms should be encouraged to entertain their clients with a view to fostering good relationships and getting to know the in-house lawyers who instruct them better.
They should not, however, allow themselves to charge the time spent entertaining their clients to such clients.
Assuming that you want to keep working with the same law firm, a good way round this is the Bribery Act 2010. Indeed, since the entry into force of the act, companies should have policies and procedures dealing with any form of corruption in place. Under the act, excessive entertainment may amount to corruption or bribery.
I would therefore recommend that you look at your anti-bribery policy (assuming there is one), amend it (if needed) or develop one with no further delay. You could also have a look at multinationals, which are often proud to make their anti-bribery policies available to the public through their website.
GCs in general should only be able to accept entertainment if it is exceptional and if the party offering such entertainment does not expect anything in return.
With a well-balanced policy in place, the GC should be able to refuse entertainment or only accept invitations to go to a few events in a polite way.
Although it is probably not what should be implemented if we want to stick to the spirit of the act, it is my understanding that UK subsidiaries of US-listed companies have strict policies under which they cannot event accept lunch from their suppliers. If lunch or food is provided during a meeting they must ask for an invoice and pay the price for the food and drinks, even at executive level.
In conclusion, I believe that with a well-drafted policy you will be able to keep a good relationship with the law firm you instruct and manage the legal budget in a more efficient way.
Kathy Atkinson, legal director, Kettle Foods
Attitudes to corporate hospitality have been changing over the past few years and it is healthy to scrutinise all invitations carefully, taking into account your company’s policy on anti-bribery and corruption. Law firms will be used to clients refusing entertainment as some companies have extremely strict policies now.
I have dealt with companies that will not even allow their employees to accept a cup of coffee from our on-site facilities, or to use a hotel that we as a supplier have recommended (even though they are paying their own bill).
“Perhaps the firm could offer some bespoke training for your team instead of entertaining you”
You could explain that you are tightening your company’s policy to ensure that only those types of entertainment that truly assist with furthering business aims, such as fostering better relationships and networking, will be acceptable in future, and that doing so is a good idea for financial reasons too. Budgets are always being squeezed and it is understandable that you would rather your external law firms spend the money they would normally allocate to client
entertainment for your benefit on something that you can see more value from – for example, could they offer some bespoke training for your team instead?
With a reasoned and sensible approach to the subject there is no cause for firms to think you are being churlish.
Elaine Hutton, EU general counsel, Shiseido Group
You sound like you need to lighten up. Law firms have a separate budget for client entertainment – you should think of it as a thank you and not as a cost which is being passed on to you.
Business is all about relationships and you will get more satisfaction and better value if you cultivate these but, of course, if you do not want to attend, just politely decline. Remember though that corporate hospitality is a great way for junior lawyers to get out of the daily grind and raise their profile, so you could suggest that invitations be extended beyond partner level.
Sally Davies, London managing partner, Mayer Brown
We are seeing a shift away from this type of client hospitality and a move towards joint CSR events with clients and lawyers. I would simply ask your external providers to come up with some options for joint CSR events, perhaps related to that firm’s charity of the year or community initiatives. That way you get to know your lawyers better but you are also giving back to the community and having an enjoyable time.
Ruth Fenton: solicitor and executive leadership coach
It’s true that some firms spend way too much on their marketing budgets each year on activities which could be seen as bribery in some cases. Anti-bribery is a hot topic. Your company should have an anti-bribery policy with a limit to what is an acceptable gift. You could use this as a reference point.”F
Relationships between lawyers, responsiveness and quality of work are much more important than going to expensive sporting events. Firms that offer added value in other ways are the ones you should be considering. For example, in addition to basic legal work they may provide free in-house training to keep you up to date with developments in your sector, introduce you to useful business contacts, offer lawyers as secondees etc.
“Firms that offer added value in other ways are the ones you should be considering”
There are many lawyers who could do your work. Setting minimum criteria will help you weed out the firms that flash the cash and help you discover a better alliance. Be open to approaching firms yourself using word-of-mouth. Many lawyers don’t like marketing so approaching someone you have heard is good will avoid the hard sell of a firm that has a large marketing budget.
The views expressed here are personal ones and do not necessarily reflect those of the panel’s organisations. If you’re a lawyer who wants to put a question to our panel of experts, email email@example.com
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