Controlling costs remains a top priority for corporate legal departments – so it’s not surprising that in-house leaders are seeking greater value for legal services from outside counsel. What knowledge, capabilities and skills do general counsel look for when hiring external law firms? What criteria do they use to measure strategic value and productive relationships with law firms they retain?
Join this episode of the Robert Half Legal Report as host Charles Volkert, senior district president of Robert Half Legal, and Jamy Sullivan, executive director of Robert Half Legal, discuss the changing expectations of legal departments and the impact on the selection, management and evaluation of outside counsel. They also offer tips to help law firms respond effectively to heightened expectations and more clearly demonstrate their value.
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Robert Half Legal Report
Great Expectations Legal Departments’ Changing Requirements for Outside Counsel
Intro: Welcome to the Robert Half Legal Report, where we discuss current issues impacting the legal profession, related to hiring, staff management and more, with leading experts in the field.
Robert Half Legal provides lawyers, paralegals and support staff to law firms and corporate legal departments on a project and full-time basis. The Robert Half Legal Report is here on the Legal Talk Network.
Charles Volkert: Hello everyone and welcome. I am Charles Volkert, Senior District President of Robert Half Legal and the host of our program. Our guest today is Jamy Sullivan, Executive Director for Robert Half Legal, where she provides leadership and direction for the company’s global legal staffing and consulting solutions business.
Jamy earned a Juris Doctor from Capital University Law School in Columbus. Prior to joining Robert Half, she worked as a Law Clerk for a labor and employment firm in Ohio and interned with the Ohio State Legislature.
Jamy, welcome to the program.
Jamy Sullivan: Thanks Chad. Happy to be here today.
Charles Volkert: Well, today we will be discussing the changing expectations that General Counsel have for outside counsel. We’ll explore why legal departments are looking for greater value from the law firms that they retain and how this impacts their selection, management and evaluation of those firms. We’ll also explore how law firms can effectively respond to these dynamics and clearly demonstrate the value they offer.
So, Jamy, maybe to start, can you explain how relationships between in-house legal departments and outside counsel has changed during the recent years, and what has been driving these changes?
Jamy Sullivan: GC and outside counsel relationships have been changing for many reasons. GC roles are expanding and they are becoming more strategic and there is pressure to reduce operational costs and boost in-house capabilities and efficiencies.
More than half of corporate counsel we recently surveyed, said that they would be expanding and adding new positions in the second half of 2019. We are also seeing more complex industry regulations and many corporations are expanding their focus on business globalization.
Today, many General Counsels look to outside counsel to be strategic as well as a trusted advisor that can offer both legal and business solutions. They want an in-depth specialized industry knowledge and really experience not that’s just a one kind of do-it-all firm anymore.
Charles Volkert: I couldn’t agree more, Jamy. I hear partnership used so much by the in-house counsel that I chat with about what they’re looking for in their law firm beyond exceptional legal work.
So General Counsel are looking for this greater value from their outside counsel, but this is not just centered around reducing expenses, while many GCs are bringing routine matters in-house to save on costs. They’re often willing to pay more for strategic legal counsel. So how are GCs determining or defining greater value that they’re looking for with their outside law firms?
Jamy Sullivan: All very valid points, Chad, and it’s interesting, we recently surveyed corporate lawyers really in small as well as mid-side legal departments and they reported that on average they’re working with six law firms on retainer. We also found GCs typically look to three primary factors for that value. One would be expertise, two would be price, and three speed of response.
So it’s important that a GC consider all of these factors when they’re weighing and determining who they will work with from an outside counsel perspective.
Firms that can proactively and consistently demonstrate success and measurable results are highly sought after. They need to be best suited to specific assignments based on specialized and legal business expertise.
From a price perspective, a firm should show that they are cost-sensitive and willing to consider alternative fee arrangements for different kinds of legal work. In fact, 46% of corporate lawyers we recently surveyed said, they used performance-based fees, 45% used flat or fixed rate fees, and then it was followed by a blended hourly rate with 42% of the responses.
Understanding and keeping ahead of the current legal departments’ business particularly around compliance, regulatory and privacy implications are also important. Understanding and keeping current on legal departments’ business as well as compliance, regulatory and privacy implications are all very important for firms to do.
They should also leverage technology to facilitate their processes and optimize overall the legal services that they’re delivering to their GCs, so they can show their continued value they offer.
Charles Volkert: Great entail, Jamy, and really great on the stats as you broke down some different billing arrangements. So what do General Counsel tend to value most in this outside counsel partnership?
Jamy Sullivan: As I am sure you can imagine, it varies from one legal department to another. General Counsels at smaller companies may look to firms with a breadth of expertise, resources and capabilities; a one-stop shop, if you will.
GCs at larger companies may need to retain outside firms with more specialized expertise and niche practice areas; for example, mergers and acquisitions, intellectual property as well as international law if they are a global company.
Typically at the top of the list, regardless of the size of the company, GCs look for breadth of industry sector expertise, including in-depth understanding of their company’s business. Other important factors of course include trust, consistency and timely delivery of successful results.
Once again, being very proactive and how they offer strategic advice, being strong client-centric mindset, this really helps a client offer more targeted outcomes and understanding of where their business is going, and then we also look at GCs wanting to be able to have a free flow back and forth with their client to provide feedback, so this is also important for law firms.
Charles Volkert: Very interesting, Jamy, and many GCs want their outside firms to have a solid understanding of the company’s business. Why is that so important in today’s business climate and how can outside counsel stay current with their clients’ business and legal matters?
Jamy Sullivan: Definitely a question that we have come up quite a bit when we’re working with law firms and General Counsels. GCs depend on outside counsel to provide thoughtful as well as quick answers and solutions that are very strategic.
They should be giving advice both from a legal as well as a business perspective. To do so effectively, retained firms need to understand how a company works, how it fits into the sector in the marketplace, what the current challenges and risks are, as well as who are their competitors, and ultimately, what is the long-term business plan of the company?
That knowledge and understanding enables a firm to effectively anticipate a company’s needs and offer strategic advice and protect the company’s interest while delivering valuable legal services.
To stay current on the company’s business, I definitely would recommend that you monitor the news about the company as well as the industry that they are in, look at the company’s public filings and news releases as well as any key industry publications that might be available in the market, this will continue to help you understand what are the challenges that that legal department could particularly be facing?
Charles Volkert: Great insights, Jamy. We’ll get back to our discussion of the Changing Expectations of Legal Departments for Outside Counsel in a minute; but now, it’s time for a quick break.
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Charles Volkert: Welcome back to the Robert Half Legal Report. I am Chad Volkert and with me today is Jamy Sullivan, Executive Director for Robert Half Legal.
Today, we’ve been discussing the changing expectations GCs have for outside counsel and the criteria they use for selecting those firms.
Jamy, I’d like to explore a related aspect of the legal department and outside counsel relationship. Once law firms are retained how can legal departments effectively measure their value and performance, and number two, can you outline some best practices in and around that?
Jamy Sullivan: At the onset of the relationship, GCs should outline very specific goals and targets for the outside counsel.
They should define and communicate specific standards that describe what it means to them, that is a successful outside counsel partnership. Examples might be achievement of expected outcomes, timely work product delivery within budgets, collaboration with the legal department, those are all great examples.
Another best practice is to regularly review with outside counsel the performance against those standards that they establish at the onset. It’s recommended to conduct discussions with outside counsel to solicit their feedback, talk about areas of improvement, and then develop action plans accordingly.
Charles Volkert: So, maybe we’ll shift gears slightly, Jamy, and if you could share with our listeners on how law firms can effectively respond to the heightened expectations for outside counsel; in other words, how can they clearly demonstrate the value they are providing and deepen their relationship within the legal department?
Jamy Sullivan: Absolutely. Law firms should demonstrate deep understanding of the clients’ business, as we’ve talked about at length, and they should really focus on anticipating future challenges and offer that strategic advice proactively, providing solutions to help mitigate risk.
They must be able to regularly communicate the updates that they have with the legal department to avoid any surprises and really provide a realistic expectation of the status of the services that they’re providing, the outcomes that are upcoming and the costs.
It is important to continuously focus on delivering business solutions to advance the company’s overall goals and interests and no potential business impact for every solution that you’re offering.
Charles Volkert: Excellent, Jamy, and as we look ahead, do you see any trends emerging relating to General Counsels’ relationship in particular with their outside counsel?
Jamy Sullivan: Yes, Chad. We are seeing emerging technologies such as legal analytics, contracts management programs, these may impact relationships and management practices between GCs and outside counsel. We will look at monitoring legal specialization trends and regulations as they may change and also impact how GC’s expectations are of their outside counsel.
Charles Volkert: Jamy, your expertise has been spot-on as well as all the helpful tips for our listeners. Unfortunately, we’ve reached the end of the program for today, but I want to thank you for joining us and sharing such valuable insights.
Jamy Sullivan: Thanks for having me today, Chad.
Charles Volkert: And before we close and let you go, Jamy, how can our audience contact you to get more information and tips that you’ve discussed today and even beyond?
Jamy Sullivan: The best way to reach me is via email at [email protected].
Charles Volkert: Thank you, Jamy. And our listeners can reach me at [email protected], and you can visit our website for additional information on legal career and management resources including our latest Salary Guide for Legal Professionals at roberthalflegal.com.
Thanks again, Jamy, and to our audience for listening today.
Join us next time on the Robert Half Legal Report as we discuss important trends impacting the legal field and legal careers.
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