Allocatur

7 Habits of Highly Ineffective Lawyers

A post from JD Hull at his What About Clients blog is a lighthearted look at what makes a "useless" advisor to in-house counsel. Mr Hull notes the following attributes:

1. Be risk-averse at all times. Clients have come to expect this from their lawyers. It's tradition. Honor it.
2. Tell the client only what it can't do. Business clients are run by business people who take risks. They need to be managed, guided, stopped. Don't encourage them.
3. Whatever you do, don't take a stand, and don't make a recommendation. (You don't want to be wrong, do you?)
4. Treat the client as a potential adversary at all times. Keep a distance.
5. Cover yourself. Write a lot to the client. Craft lots of confirming letters which use clauses like "it is our understanding", "our analysis is limited to..." and "we do not express an opinion as to whether..."
6. Churn up extra fees with extra letters and memoranda and tasks. Milk the engagement. (If you are going to be a weenie anyway, you might as well be a sneaky weenie.)
7. As out-house counsel, you are American royalty. Never forget that.

I recently read an article from a former in-house counsel, who has now returned to private practice (and apologise to him because I cannot locate the article to attribute the comment). He noted that the best external lawyer was the one who when consulted would say:
"Yes, there is a problem - but I have some solutions."

The Harris Cost Lawyer/Mahlab Recruitment survey found that one of the most pressing issues for in-house counsel was keeping aware of corporate activities that may have legal implications. In-house counsel needs to be able to find solutions to issues brought to them by their internal clients. They don't need external counsel to simply present them with barriers - too many external lawyers take the approach recommended in point 2 above.

KPIs as a Marketing Tool for Law Firms?

The Harris Cost Lawyers/Mahlab Recruitment survey of Corporate Counsel/Law Firm Relationships found that 51% of corporations use panel firms, but only 23% of Corporate lawyers had procedures in place to formally review the performance of their lawyers, even if a panel was used.

Formal KPIs provide a non-threatening environment in which a client can express their concerns and desires. It is an interesting marketing tool for a law firm to propose their own set of KPIs, if the client does not do so. This assists the client, but also sets the ground rules and parameters within which the parties are operating. Identifying appropriate KPIs will require identifying the client's expectations - which is the base starting point for delivering value to the client.

We all should know that we are fortunate if a client expresses dissatisfaction, because at least we then have the opportunity to remedy the situation. 95% of clients keep quite if they are unhappy and simply never come back, or worse still, we both lose the business and end up in a dispute over costs.

Formal KPIs help avoid this.

Do In-House Counsel Charge Other Business Units?

78.4% of Australian in-house counsel do not track internal legal costs - therefore most costs are not passed back to other business units. Only 6% of Australian in-house counsel charge business units, and if they do, costs are generally based on an estimate rather than on time actually spent. Tracking internal legal costs is one way of demonstrating value of the legal department - if this work was not undertaken by the in-house department, significantly greater costs would have been incurred with external lawyers. Rees Morrison has an interesting post about the New York City in house law department sending hypothetical bills to all the City departments it represents. Both demonstrating value, but also a way of encouraging efficiency in the use of the law department. This could also be used to show how a lack of communication within a corporation about business activities can increase costs in the corporation. (see my previous post on pressing business issues).

What do Corporate Counsel want from their Lawyers?

In conjunction with Mahlab Recruitment, my law firm, Harris Cost Lawyers, has recently conducted a survey of members of ACLA (Australian Corporate Lawyers Association) about their relationship with external law firms. In the next few posts, I will look at particular results, with some comment on comparable overseas findings. The full survey results are available at www.harcosts.com or www.mahlab.com.au.

Approximately 1800 corporate counsel members of ACLA asked to respond to the survey, which was made available by ACLA in March 2006. Responses were predominantly from New South Wales (37%) and Melbourne (36%) with the major industry areas represented being Banking and Finance and Energy and Resources.

Respondents were asked what the most pressing business issue was. Number one was reducing the external legal spend, but keeping apprised of other corporate activities that might have legal implications also rated highly. These reflect the combined pressures of financial constraints and increased regulation and compliance.