8 things to think about when appointing a law firm

Why engage external lawyers?

You will usually engage external lawyers for two main reasons – expertise and resource. The legal work may require a level of expertise and specialisation beyond that of the in-house team. While the in-house team may have unrivalled expertise in its core business, there may be a one-off or ongoing need for legal work in a non-core area and for this you need external expertise.

Then again, you may need additional resources to carry out work, perhaps in relation to a fixed project, where it makes little commercial sense for you to boost the in-house team, at least in the shorter term.

There are alternatives to engaging a law firm, of course. You may go straight to counsel if you need an opinion on the law. Or you may be looking at an ‘alternative’ provider to temporarily boost the in-house team or provide you with a different type of resource, for example where what’s needed is document review or e-discovery. And you may also be able to reduce demand on the in-house team by pushing some less complex work back to other departments, perhaps with some guidance or training from you.

When you’ve decided to engage a law firm this will involve a procurement process. How formal this is will depend on organisational and other requirements, but it will require you to assess potential providers (law firms) against required criteria.

Being clear about what you want

So that you are able to control the agenda, it helps to be clear about what you’re looking for before you begin the process. Of course, you’ll want a formal agreement with the law firm(s) you engage, but here are some of the things you may want to consider upfront:-

What’s the time-frame and scope of the engagement, and how will any changes in scope be dealt with?

What are the reporting requirements? What’s the required format of the reports, their frequency and who needs to receive them?

Aside from the usual requirements around confidentiality, privacy and data security, are there any particular sensitivities that you need to factor in?

IT requirements – will the law firm’s lawyers be working entirely remotely or will they need to work on-site with access to your systems?

Are IP rights likely to be in issue?

Outcomes and service levels. What outcomes do you need from the engagement, what is the level of service you require and how will this be measured? And particularly if the law firm’s work will involve or impact your non-legal colleagues, make sure to factor in what they need.

Budgets. Depending on the nature of the work you’re outsourcing, your budget may need to be a little flexible but, essentially, you need to know where your overall boundaries lie and your budget for particular phases of the project. If you don’t know this you’re unlikely to control the agenda when you’re discussing these issues with prospective providers.

Having thought about these (and any other relevant) factors, what are the things that will distinguish one law firm from another when you’re deciding who to engage? Here we consider eight differentiating factors.

1. What does the firm know about your organisation and sector?

No matter what work you’re outsourcing, it’s important that the law firm knows about your organisation and the sector(s) in which it operates. This means understanding the relevant legal and regulatory frameworks as well as being committed to learning more about your organisation and its personnel in order to provide you with a high quality service – say by gaining insight into the issues confronting the GC, executive management and the Board.

2. What experience does the firm have of this type of work?

Industry awards and rankings are great but what is the firm’s track record in carrying out similar work in your sector? Where are the testimonials and can you speak to their other relevant clients, if you want to? You’ll also want to know about the lawyers who will actually be working with you. A partner may have a stellar reputation in this area but will they be doing the work or will it be delegated to junior colleagues? Those colleagues may well be excellent, but you need to ask the right questions to make sure.

3. What about the service?

While relevant knowledge and experience are critical factors they won’t amount to much if the service you receive is poor. You know what good service looks like because you have to provide it to your own ‘clients’. You’ll want evidence that the firm gets the importance of a high quality service and performance and, particularly, what that means to you. For example, 24/7 availability may be less important than getting concise, regular updates on workflow and costs that you can easily share with colleagues. And while the firm may have a good reputation for its service, you also want evidence regarding the lawyers that will be doing your work. So, the commitment to providing a high quality service needs to be firm-wide.

4. What about the people?

Remember that when you select a law firm to carry out work for you the success (or otherwise) of the relationship will reflect on the GC and the in-house team. This means that, in addition to knowledge, expertise and a commitment to excellent service, you need to be working with lawyers who have good people skills, are commercial, and who will adapt quickly and flexibly to changing requirements and demands. You need to be comfortable that the Board and senior management (in addition to you) will be comfortable with the lead partner(s) and other lawyers in the external team. In other words the firm’s lawyers need to reflect the qualities you require in your in-house lawyers and be seen as extension of the in-house team, each complimenting the reputation of the other.

5. Budgets and money

You may not be looking for the cheapest but you do want fee options that you feel comfortable with and can sell internally. In particular, you want the firm to proactively address matters such as predictive costs (including at stage-posts), budget caps, risk sharing, contingency and success, particularly so where the work is complex and outcomes less certain. And given that the firm is very likely to have experience of the area of work in question, how good are their systems at interrogating similar work in order to predict the likely cost of a piece of work? Essentially, you want the firm to have a sophisticated, commercial approach to predicting cost and agreeing budgets based on outcomes and not just time based inputs.

6. Diversity and Culture

Many law firms are doing excellent work in these fields but, again, you’re not looking for accolades but rather for evidence that the firm has embraced change in order to become better, smarter, more agile and more competitive. Is the firm a business that you’re proud to partner with, not just because it has smart lawyers delivering an excellent service but also because it mirrors the standards and ideals of your own organisation? Consequently, you may want to look at what diversity and inclusivity actually look like in the firm. So, for example, what is the evidence that the firm is a modern business committed to attracting and retaining a high quality, diverse workforce with a respectful, meritocratic culture?

7. Outcomes not activity

When you appoint a law firm you’re interested in the outcomes and not (simply) in the activity. Knowing what systems, processes and technologies are engaged to carry out your work is great and will surely be of interest to you. But, essentially, you want to know that you’re working to agreed outcomes. These may be relatively straightforward, say in a commercial property transaction, or less certain, for example in a litigation case. Whichever, you need the firm to be focused on those outcome(s) and to ensure that their updates/reports identify progress against them.

8. Making the GC look good

Of course, this doesn’t mean telling the GC only what the firm thinks they want to hear. The firm must be clear and direct in its advice, however challenging that may be. But it does mean helping the GC manage the workflow and the relationship. It’s important that the firm is very interested in what you need and what will make the relationship a success. And it may come down to some fairly basic touches, such as clarity, accessibility, team knowledge, reliability and promptness. Think also about those ‘add ons’. What other services does the law firm provide that may be helpful to you – for example, training and targeted business intelligence?

Summary

It’s very rare for in-house legal teams to carry out all of their organisation’s legal work. So, engaging one or more law firms will be part of the operating model for providing legal services to the organisation. Getting the appointment wrong can reflect badly on the GC and the in-house team and result in some difficult conversations with senior colleagues. But getting it right not only means that the work is carried out to a high standard on acceptable terms, it can also help enhance the reputation of the GC and the in-house team for good management and judgement.

References

Six Questions to Ask Before Choosing a Law Firm – Forbes Legal Counsel March 31 2016

Hiring Outside Counsel? 5 Things to Consider – Mark Wilson, In House Findlaw Corporate Counsel Blog April 29 2015

5 Things GCs Want From Outside Counsel – Katherine Magnuson (Rubenstein Associates Inc. Bloomberg Law, March 30 2015