Sailing through a rough economy

How can in-house and external counsel work together to transform the provision of legal services?

In a challenging economy, legal cost is usually seen by businesses as a strong candidate for potential savings. With that in mind, in-house counsel who continue to focus on talent retention, team development and work-life balance, need to navigate budget limitations through different measures, including re-deployment of available resources and most importantly by curbing external spend.

The professional and commercial value that external counsel can add is undisputed. What is crucial, however, is to contemplate the ways external counsel can help in-house counsel efficiently meet the increasingly challenging expectations of their internal clients.

From discussions with external counsel in different countries, I see the majority are already looking into ways to align their business model with the new expectations from in-house counsels influenced by the demands of their internal clients. In-house counsel candidly sharing their ideas, expectations and needs could further assist law firms in accomplishing that business model change.

In this article, I aim to outline thoughts –an in-house counsel point of view on how law firms can provide stronger support to in-house teams. It is admitted that some of those thoughts may not be viable for all but I hope this will be a useful starting point for some.

The challenge with external spend is not only saving but also accurate budgeting. Compromising on service quality is not an option.

Finance Departments are now seen to insist more than ever on accurate forecasting of external legal spend. It is fair to say that many companies have been successful at navigating the difficulty of forecasting legal spend pertaining to emergencies, dispute resolution and special projects. Nevertheless, a large portion of legal spend still goes to other types of external instructions that, from a Finance Departments’ standpoint, could be anticipated.

Law firms can, in my view, be of great assistance to in-house counsel in that respect by finding innovative, flexible and transparent ways to reach a win-win solution. For example, an in-house counsel who is responsible for multiple jurisdictions may prefer working with a law firm that can offer quality legal advice in more than one jurisdiction for an all-in annually revisable fee cap covering a mutually-agreed and clearly defined scope of legal services.

Besides legal advice that is professional, practical and provided with a great sense of urgency, most – if not all – in-house counsels will appreciate a law firm’s proposition that offers value-add services, which may include one or more of the following:

• A subscription-based local legal knowledge wiki
• Contributing to orientation of new in-house lawyers
• Designing and hosting a database of legal opinions provided to the client with free access to the client’s legal department
• Reasonably-priced contingent legal support during the process of replacing departed in-house counsels
• Low Cost Centers for handling routine and relatively low value matters

As alluded, the above points only represent some of my own ideas that may admittedly not be feasible for all. The key takeaway, in my opinion, is the importance of open discussion between in-house and external lawyers on the realities of the current environment. Through that discussion, we can together seize this opportunity to proactively modernise the way we serve our clients. This will definitely help us meet the expectations of increasingly-demanding clients and ensure continued appreciation of the pivotal role that lawyers have long-played in international business.

In-house counsel have an essential role to play as well. The discussion goes on…

Columnist:

Walid Sowaidan, area general counsel – CEEMEA, 3M