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Sweetening the corporate deal

Feature Articles

Cite as: (2003) 77(8) LIJ, p.58

What makes some firms successful in attracting and retaining corporate clients while others watch from the sidelines? What makes an in-house lawyer choose one firm over another, or decide whether to insource or outsource?

By Kirsten Mander

Companies today are so diverse. They have different businesses, risk profiles, cultures and priorities. While once it may have been possible to generalise about what services a lawyer should provide and how, it is certainly not any more.

Today’s corporate client is, for the most part, a highly demanding and discriminating consumer of legal services. Corporations are aware that the legal market is highly competitive – and that many law firms are capable of providing the high quality of service they expect. As a result, when choosing or deciding to remain loyal to a law firm they look for more than just good legal advice.

In fact, the recent Legal Beacon 2003 study[1] conducted by Beaton Consulting identified 13 factors, all of which play an important role in the decision to choose one firm over another. As Beaton Consulting principal Colin Jasper noted, “Not only do clients want a law firm that is technically competent, reliable, responsive, commercial, friendly, cost conscious etc. – they expect law firms to deliver on each of these attributes. Where clients have concerns regarding a law firm on any one of these dimensions they are likely to, at the very least, trial another firm”.

When considering what makes in-house counsel choose one firm over another, it is important to recognise that for most companies a firm’s ability to provide good quality legal advice is largely taken as a given. In the Legal Beacon survey almost 60 per cent of the 1600 respondents rated the performance of their preferred law firm as excellent (eight to 10, out of 10). Similarly, reliability, responsiveness and quality documentation were also all regarded as givens. Given that the majority of firms are performing well on these dimensions, they are non-differentiating. None of these factors will win firms the business – they just provide the ticket to the game.

What in-house counsel and their businesses look for are law firms that are able to focus their activities on those that provide genuine value to the business.

Most law firms, of course, strongly believe that they are customer focused. I do not think I have ever met a lawyer who did not believe that they add great value – if only the client would just appreciate it. Yet, as an in-house lawyer on the other side of the fence, it is clear that most lawyers focus primarily on what they have to offer (their intelligence, experience etc.), or the activities they have performed, rather than on standing in the shoes of the customers and identifying their needs.

Generalisations, lip-service or preconceived ideas about customer focus fool few clients. Successful business lawyers will have a clear understanding of the business and their own value proposition for that business. They will have done a sophisticated analysis of the business risk profile, its key success factors and culture. They will know the answers to key questions such as: “What makes them competitive?”, “What are their problems?”, “How could I make them more successful?” and “What are they prepared to invest or trade-off to get it (e.g. quality v speed v cost v flexibility)?”.

They will also get agreement from the business about this trade-off, avoiding the trap of being left chasing faster and cheaper and better etc. all at once.

Successful business lawyers recognise that different businesses value different combinations of benefits, price, investments and trade-offs. So they have a different value proposition for every company and management team.

For example, many companies operating in highly competitive markets place a high priority on pragmatic decision-making, fast turnaround and flexibility. On many issues these companies would rather have energised, customer focused managers who take responsibility for their own decisions than encumber and disempower them with systems to minimise low-level risks. Lawyers who do not understand this risk irrelevance, or may even endanger the business by destroying entrepreneurship through excessive risk aversion.

Despite this, there are also some factors that are common to most companies and in-house counsel. Key among these is the need for assistance in meeting the enormous demands placed on them by the ever increasing speed of business, the demands of multiple stakeholders and the need to constantly do more and more, with less and less.

Many senior in-house counsel can empathise with the manager who, when asked what his day was like, said it “felt like someone had put a pot over his head and was banging it with a wooden spoon”. The din of information and demands are so consistent that you have a ringing in your ears. A valued lawyer is one who is able to tailor the information provided, to give you what you need to know, when you need to know it, no less and, equally importantly, no more.

A valued lawyer also understands that within companies these days, just as outside them, there are often high levels of ambiguity, conflicting needs and multiple stakeholders.

In-house counsel play a number of roles. At a minimum they will be the legal gatekeeper, carrying responsibility for approving who is briefed when, having an overview of their performance, and translating and mediating between the commercial and the legal worlds.

Retaining the trust and confidence of in-house counsel and working as a team with them is essential for a successful relationship. However, it must also be recognised that the client (the company) is not a single entity with a single voice – it is a management team. The reality is that a range of people commonly need to have input and be satisfied with different elements of legal matters, depending on the type of matter and business. Some of these are overt and some are not, but all of them are part of the rich panorama of issues a business lawyer needs to learn to work with.

No consideration of what companies want is complete without consideration of legal costs. Whatever the size of the company, the legal budget is always limited. Not surprisingly, as the Legal Beacon survey demonstrated, cost consciousness is a significant differentiator between firms. Cost consciousness, however, is not the same as having low hourly rates. It is about a consistent focus on achieving maximum efficiencies and productivity and cutting out low value legal services. Too many lawyers do not know when to stop – no risk is ever so small that it can be ignored, no issue is ever so unimportant that it is not worth investigation.

In-house counsel look for lawyers who can demonstrate their ability to consistently manage their activities to minimise unnecessary costs, work in accordance with estimates or matter plans, and avoid the consultant’s tendency to spend a pound to save a penny. They also look for lawyers who are not only good at fixing problems, but who work with them to build business capabilities to address future problems.

Other differentiating factors which are often under estimated include the firm’s ability to meet the company’s procedural requirements, particularly on-time quality reporting and the firm’s systems and performance regarding conflicts of interest.

Last but not least, the firm’s culture plays an important role. Firms generally underestimate how much of what goes on inside the firm is visible from the outside. Firms with internal cultures that are positive, honest and oriented towards working together to create value reflect this externally. The “every man for himself/eat what you kill culture” not only tends to produce poorer quality lawyers (less commercially rounded, poorer at judging stakeholder responses etc.), they also seem to have difficulty maintaining a genuine client service orientation.

Insourced or Outsourced

Just as different companies value different combinations of benefits, price and trade-offs, different legal service providers (internal, contract or external) will be more or less well-suited to particular types of matters. An important part of the role of general counsel is to review the company’s legal needs, determine in what areas each adds most and least value, and refer the elements to the most appropriate or cost-effective service provider to perform.

Generally, work that relates to the company’s core business, policy issues or strategy will tend to be performed by in-house lawyers, who are likely to have a greater understanding of the business, its objectives and personnel. Comparative cost is also a factor, but can be overstated.

Matters will generally be referred to an external lawyer where their specialised knowledge is required, or a broader market perspective is needed, or where the matter does not require a deep knowledge of the company’s operations, culture and policies. Routine or repetitive legal work, where firms may have economies of scale and specialist support resources, will also frequently be referred out. External firms will also be used to cover peaks in workload and where the resourcing needs of matters exceed the resources of the in-house team.

The bottom line is that corporate clients are not predictable and it is not easy to keep them happy. Rule number one is, never present a problem without a suggested solution. With that in mind, some suggestions for consideration include:

  • work out a value proposition for each client – starting from expressly identifying the client’s business objectives, their risk/reward profile, needs and operating environment. Only then look at what you have to offer that might meet these needs;
  • to help you focus on where you can add most value, try starting your analysis from defining where you probably do not add value. Do not try to be all things to all people;
  • review and adapt each value proposition and relation ship at regular predetermined intervals. Remember that all organisations change constantly and cycle through different stages in terms of their priorities and needs (e.g. internal v external focus, risk v performance, systems v efficiencies);
  • expose yourself to the same influences that they are exposed to. For example, do you know what the Australian Corporate Lawyers Association is and what its priorities are?;
  • examine your business processes and develop them to remove barriers, facilitate information exchange and drive efficiencies;
  • to manage expectations and prove value, work with internal counsel to agree on key performance indicators; and
  • consider service level agreements.

Work closely with internal counsel and treat them as your partner, not your competitor. Keep them well informed, build a relationship of trust and make sure there are no surprises. Ask constantly “what are you trying to achieve here?” and seek feedback on what is delivered.

Make them look good and help them make you look good. Work with them to develop the value proposition.

There are few teams more powerful than internal and external counsel working together to make the client happy.


KIRSTEN MANDER is deputy chair of the Australian Corporate Lawyers Association (Victorian Executive) and has been employed as in-house counsel for more than 13 years, most recently as general counsel of Smorgon Steel Group and previously as senior legal manager with WMC Resources. As well as working in both corporate and private practice in Australia, she has worked on a variety of overseas transactions in places as diverse as the US, Philippines and Uzbekistan, where she has accumulated considerable experience in working with external counsel across corporate, geographic and cultural boundaries.


[1] Legal Beacon 2003 is a study of 1600 key buyers of Australian legal services. For more information, see http://www.beaton.com.au/Legal_prospectus.html.

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