Joe and Elie discuss the in-house world. Lawyers and law students often daydream about what they perceive as the cushy world of going in-house. But these lawyers face their own challenges. A recent comprehensive survey of corporate legal departments reveals confusion over privacy requirements and complaints over outside counsel costs.
Above the Law – Thinking Like a Lawyer
The Challenges Facing In-House Counsel In 2019
Intro: Welcome to Thinking Like a Lawyer with your hosts Elie Mystal and Joe Patrice, talking about legal news and pop culture, all while Thinking Like a Lawyer, here on Legal Talk Network.
Joe Patrice: Hello. Welcome back to another edition of Thinking Like a Lawyer. I am Joe Patrice from Above the Law. I have with me Elie Mystal. How are you?
Elie Mystal: Hey, what’s going on?
Joe Patrice: I mean law stuff.
Elie Mystal: There is kind of always law stuff going on just at the moment in America.
Joe Patrice: I mean, yeah, okay.
Elie Mystal: That’s not what I am angry about though. I am not angry — it’s the rare day that I am not angry about Donald Trump, because I feel like finally there are other people who are now angry about the consistent illegalities committed by the President of the United States, whether or not that will result in any kind of change is anyone’s guess, but at least people seem to care right now, the media — Trump has been unable to like get the media off this story, which is rare for him, so I am enjoying that.
And so instead I want to talk about something that the media is not covering.
Joe Patrice: Okay.
Elie Mystal: I don’t know how much of our listeners have been following the Amber Guyger trial, but Amber Guyger is the cop who while off-duty shot and killed her neighbor. She alleges that she accidentally walked into the wrong apartment, saw a strange black man there and shot him two times in the chest killing him after he came at her.
Everybody else says the black man was sitting alone in his apartment, on his couch watching his TV, eating his ice cream, and this woman walked into his apartment and shot him, what’s up with that?
So last week she was — or I guess two weeks ago by the time you listen to this, she was convicted of murder. She got 10 years, which is a light sentence, but I don’t want to go into that because it gets us into over incarceration issues, which —
Joe Patrice: Right, a conviction and sentence at all is probably —
Elie Mystal: A white cop was convicted for murder for killing a black man, I will take that to the bank. I am not going to worry too much about the heftiness of her sentence.
But afterwards, one of the key witnesses in the trial was Botham Jean’s, the black man who was killed, neighbor Joshua Brown. He lived down the hall from Jean. He allegedly — he testified that he heard what he believed was a surprise meeting of two people and then seconds later gunshots. The cop Amber Guyger had argued that she had shouted hands up, hands up. Joshua Brown testified that he didn’t hear anything like that and that there wasn’t enough time for basically Amber Guyger’s story to check out, which people think is the main reason why she was eventually convicted.
Josh Brown turned up dead last week. Initial reports say that he was shot in the chest and the mouth.
Joe Patrice: Isn’t that a well-known mob land sign for somebody who —
Elie Mystal: Signal, who maybe spoke out of turn.
Joe Patrice: Yes.
Elie Mystal: So he was shot.
Joe Patrice: Interesting.
Elie Mystal: So he was shot and killed. The key witness in the conviction of a cop was shot and killed. This raises questions. The Mayor of Dallas, where this all went down, urged people not to jump to conclusions, and for a good day I held my fire both on Twitter and all through social media, kind of waiting to see how the police were going to explain this situation, and then the police story came out.
According to the police Joshua Brown was involved in a “drug deal gone bad” that involved — remember, Brown lived in Dallas, and according to the cops three suspects drove from Louisiana all the way to Dallas, about a four hour drive to either buy or sell drugs to Mr. Brown. The deal went wrong somehow and Brown ended up dead.
Folks, that is not what happened.
Joe Patrice: Yeah, the more important — you skipped over the only actually important part of this whole tale, and it strikes me, there is a joke that I have, an in-joke that is long or whatever, about ridiculous situations where you are like oh, you are listening to somebody tell the story and then they say the dumb thing and they go, you know, actually now that I hear it myself out loud, I see what the problem is.
What part of this story that when the cops told it you are like oh, well, now that I hear myself saying it out loud, this doesn’t make any sense?
Elie Mystal: It’s the part where they are arguing.
Joe Patrice: How do they know it’s a drug deal?
Elie Mystal: Well, how do they know it’s a drug deal, because according to the cops they left — after the deal went bad, they left the weed and the money behind.
Joe Patrice: Yeah, when you say that out loud, that’s where the story starts to fall apart, doesn’t it?
Elie Mystal: You are going to drive four hours from Louisiana to Dallas to buy drugs, shoot the man who was selling you the drugs, leave the drugs and the money that you arguably brought to the party behind.
Joe Patrice: I assume after you commit an act like that, you start rethinking your life and decide that maybe drugs is not the path you want to be on.
Elie Mystal: The reason why I skipped over that part of the story is because I don’t actually think that’s the dumbest part of the story.
Joe Patrice: Oh, but it is.
Elie Mystal: The dumbest part of the story to me, and this goes with our show here, if you think like a lawyer for a second, what the cops would have you believe is that the star witness for the prosecution in a cop murder trial was a drug dealer, A.
Joe Patrice: Yeah.
Elie Mystal: That they rested their case on his say-so, that the fact that he was a drug dealer either did not come up or was unknown to the prosecutors during the trial and that the defense attorneys, who again were cop lawyers and a bunch of police officers, also did not figure out that this man was a drug dealer and did not use his drug dealing past to impeach his credibility at trial, folks, that didn’t happen. That is not what happened.
There is no freaking way that you can be moving the kind of product that it would require to make it worth it to somebody to drive four hours to hook you up, and somehow none of the police, none of the prosecution, none of the defense attorneys ever figure that out during your high profile murder trial, of which you were a star witness.
So I don’t know what happened. Again, I have my speculations and thoughts, but what the cops say happened did not happen.
Joe Patrice: Yeah. When I read the original explanation and the question is, well, how did you know he is a drug dealer, oh because of all the drugs that were left and money that was left behind. I was like now, do you hear yourself? Have you thought this through?
Because I am not Nancy Drew, but that’s one of those clues that I mean —
Elie Mystal: There is a good Dave Chappelle skit where he is playing a cop who is framing black people and the Chappelle cop says, just sprinkle some crack on them, then people will believe it, like it’s if they just sprinkled some weed on him to make people —
Joe Patrice: Instead of leaving large quantities of it and pretending that nobody would have taken that, yeah.
Elie Mystal: They left the money. That doesn’t happen.
Joe Patrice: Yeah, it was a poorly conceived cover. Question of course being whether or not that was the point, whether they even cared whether or not it was a credible cover story or not.
Elie Mystal: Yeah, they were just — I do have worries about like the rush to — because the story is so obviously crap, they have arrested, at least the last time I saw, two people, I don’t know if they found the third — they might have found the third suspect by the time you are listening to this, they have arrested people for this. They are trying to get people to confess to this thing that didn’t happen, like that’s Dallas — the police in general in Dallas.
And then what are we supposed to do about it, right, that’s the other place I want to go, like the NAACP Legal Defense Fund has called for a federal investigation. Joshua Brown’s family, his lawyer, a man named S. Lee Merritt has called for an independent investigation. Who is independent right now in this country, because traditionally you would say like okay, well, the Department of Justice needs to weigh in.
Have you met the Department of Justice lately?
Joe Patrice: I mean the people who just arrested Giuliani’s two flunkies over Ukraine stuff?
Elie Mystal: That was SDNY.
Joe Patrice: I think it’s Virginia actually, but either way, but that is the Department of Justice now.
Elie Mystal: You are hoping that —
Joe Patrice: There are independent people within this — I agree that it’s a mess, but there are definitely independent federal investigations that are ongoing.
Elie Mystal: You have to hope that that’s what happens, right, like you have to – you mean — A, there needs to be an independent investigation and then you just have to hope that the federale that gets assigned to it is independent and not just a bar flunky.
Joe Patrice: Absolutely.
Elie Mystal: Anyway, that’s not what we are talking about today.
Joe Patrice: No, yeah, no.
Elie Mystal: Because we still don’t know what happened.
Joe Patrice: Right, of course.
Elie Mystal: Just that we know that what the police say happened didn’t happen.
Joe Patrice: Right, something happened, it probably wasn’t people who left a bunch of stuff behind.
Moving on, so we wanted to talk a little bit about in-house counsel, we don’t talk about that as often as we sometimes should. It is the career path that many people don’t get the opportunity to go down, but it’s also something of a Holy Grail path, everybody wants that cushy in-house job, not that all of them are as cushy as I think a lot of people imagine them to be, but nonetheless, it’s what people dream of.
Elie Mystal: As a person who is married to an in-house counsel.
Joe Patrice: There we go.
Elie Mystal: I will say that it is not a cushy job. It’s just cushy when compared to the awful terrible grind that is being a big law senior associate or a junior partner.
Joe Patrice: Yeah, I mean that’s probably fair too. So we want to talk — there is a new report out that Exterro, ACEDS and In The House just put out, they have an annual In-House Legal Benchmarking Report and there were some interesting takeaways. They have a lot of data points that they compile every year for this report and we wanted to take a little bit of time talking about what’s going on in the in-house counsel world.
One of the biggest things about being an in-house counsel is you have one client in theory. Your job is to protect your company against all threats, foreign and domestic, and with that one of the biggest issues facing in-house counsel right now are privacy laws one would assume.
Well, there was a lot of hype about GDPR, some of us — I will certainly say I thought a lot of it was overblown, not that it’s not an important thing, but I think there was a hype machine behind how earth-shattering GDPR would be, the European Privacy Rules, that kind of flopped, and I fear almost that it flopped so badly that people are ignoring the real importance of getting companies in compliance with rules, not just GDPR, but California also has a new privacy rule and there is a patchwork of privacy laws around, there is some noise about making a federal standard.
Elie Mystal: So when asked — and if you — you should check out the story in Above the Law, it was written by Joe, when asked how concerned they were about new privacy laws, including the new California Consumer Privacy Act, 68% of in-house legal department respondents said that they were either not concerned or only somewhat concerned with the new laws.
Joe Patrice: Yeah.
Elie Mystal: Which seems like a problem, right Joe? It seems like maybe they are not taking it seriously enough.
Joe Patrice: Well, right, I mean that certainly seemed — well, it can mean one of two things. It can mean that they are not taking seriously enough, or that they feel very confident in what they are going to do about it.
The problem is that this same survey turned up that 84% have “no clearly defined processes to meet new and emerging privacy regulations”. Those two shouldn’t go together, from the same body of respondents. I don’t know what it is. Is it like the football coach telling the team we are going to win and then telling the media, I mean this is a real challenge for us this week, I don’t know, but these two things should not go together and squaring these is a real issue. And I don’t quite know what in-house counsel are doing and whether or not it’s that they feel they have to put on a brave face, I don’t get it.
Elie Mystal: See, there too — I mean we are talking about compliance lawyers and in-house counsel and that’s only one kind of aspect of being an in-house counsel, like for instance, again, I was saying, I am married to one, my wife is not a compliance lawyer, she would never have to worry about any of this stuff, but if you are specifically talking about compliance people, if you are a compliance person who is not worried about compliance, that strikes me as odd.
Now, what we do know is that compliance people tend to have two gears basically. One is gear one, where they kind of wake up at 9 o’clock in the morning and start in, is this gear of like okay, here is my checklist, right? The company is going to want to do eight things. I have to make sure that all eight of those things are basically legal. Like I have to make sure that nobody goes to jail in the company on my watch about these eight things, right?
Gear two is a ninth thing has happened, a tenth thing, something that I did not expect has happened and it’s a big deal. At which point the good compliance lawyer calls up the GC, who then calls up outside counsel and says, we have got a real problem, right, like we don’t expect compliance people to actually kind of take first cut at serious kind of litigation issues coming into their companies. We farm that out to — that’s why big law gets paid the big bucks, right?
Joe Patrice: Well, except, that’s a good transition point, which is the trend over the last several years, which this survey shows is continuing, is the massive in-housing of these sorts of jobs.
Elie Mystal: Exactly. So we are moving into a world where compliance people are supposed to do more and more and more stuff, stuff that traditionally had been farmed out, because it’s a cost savings for the company and blah, blah, blah, but then you read this report and you are like, well, then, are you doing it then? Like if we are no longer going to say okay, we have got some privacy concerns, let’s contract with outside counsel to rewrite our privacy rules.
When I was working in big law, one of our big clients was one of the major sports leagues and one of the things that we did at our firm was that every —
Joe Patrice: Shout out to professional lacrosse.
Elie Mystal: Highlight baby.
Joe Patrice: Yeah.
Elie Mystal: One of the things that we did at my firm that I got to participate in was every time the privacy laws would change, they would farm it out to us and we, me, I was a low-level associate at a big law firm, would be kind of in charge of like making sure that their e-store website was in compliance with the new privacy rules and whatever, that was a kind of classic big law young associate job 15 years ago.
Joe Patrice: Yeah.
Elie Mystal: Now, allegedly, these jobs are being pushed in-house. They are not calling my old firm to do that work, they are doing it on their own steam, except from this report it looks like they are not doing it.
Joe Patrice: I mean yeah, it seems as though they are confident that it’s going to work out, but they do not have any plan for it, which is problematic. I mean one would think that a process could be created where they get one memo from outside counsel once and then take it upon themselves to make sure everything complies with those parameters rather than farming out every question, that might be how they intend to do it.
And maybe that’s the answer here. They are saying well, we don’t have a plan, but we are confident we are going to get our memo and then we will be able to handle. I don’t know, whatever it is, it was a jarring set of stats to have right next to each other.
Elie Mystal: The other issue here, and I say this — clients are not usually listening to this show, unfortunately, but the other aspect here is the fact that clients, even if you only have one client, don’t really — business people don’t really understand what lawyers do and don’t really understand just the raw man hours it takes to get some of this stuff done.
If you are a multinational corporation with e-stores and websites and Amazon links and PayPal links all throughout your business to sell whatever it is you sell, making all of those websites, making all of those links, making all of those consumer-facing products that you have work in compliance with rapidly changing privacy laws is not a one person job. It’s not just like oh, you are a lawyer, fix that, it takes like significant amount of man hours for lawyers who are able to like go and look at all of these sites, come up with both general templates that apply to all of them, but then tweak those templates in the specifics of whatever particular store or whatever particular country you happen to be operating under in that situation.
That just takes a lot of like raw time and I don’t know that clients always understand that like just because you are a lawyer and you have figured out a potential solution to a problem, actually implementing that problem — implementing that solution itself is sometimes hundreds of hours of work that they have to pay for.
Joe Patrice: Yeah, attorney hours, because I think we let the women do that work now too, but still, no, your point is true, because it’s not man hours, and it hasn’t been for a long time, but still that’s true.
But I think this is a transition point to another aspect of this and another story is, there is also, when you are in-house, you talk about — so those of us who have never been in-house, we imagine the job being a glorified supervisor whose job is to tell a bunch of law firms to go do stuff and pay bills. Unfortunately that actually costs a lot of money too and takes a lot of time too.
And one aspect that we overlook is the budgetary pressures upon companies when they have law firms here and there and a different one here and a different one there. When you are managing 30, 40 different law firms to do stuff, that takes time and money too.
Also, when you are in different jurisdictions doing all of that, which one aspect of the last several years has been the moving from the old-school Mad Men era of all of our work goes to do Dewey, Cheatem & Howe, whatever the law firm is, that’s broken down, and we have talked about the kind of democratization of that as companies hire more and more different firms and the effects of that, in that the big firms have continued to make a lot of money and the boutiques have now started becoming niche practitioners who get a lot of jobs and the middle was kind of had a problem, and that proliferation though appears to be scaling back.
One aspect of this survey was that a lot of these companies are starting to pull back on the number of different counsel they employ for the same reasons that it becomes costly. One aspect that I haven’t written this story but is worth talking about, I spoke with at an event with a company whose job is with a product that they put out is something to allow firms to comply with the ever increasing bureaucracy of different companies. Different companies have different mandates like the bill has to be this, oh the bill has to have these details not these details. You can only bill in these kind of increments not these kind of increments.
All of that is time and money on the firm side, but it’s also time and money on the weird bureaucracy creating side, it just creates more work for them and creating a world in which they have fewer and fewer firms doing this work is helpful to them, more and more people that they work with who don’t screw up on the first pass of creating a bill.
That’s an interesting turn because we broke down this kind of monolithic everybody works with one firm model and split it out and now it seems to be coalescing like a solar system after a cataclysm, like the disk is accreting again.
Elie Mystal: Do you think that that trend benefits big law firms or do you think that it will help some of the kind of mid-sized firms get back in the game?
Joe Patrice: It’s an interesting question. I didn’t really know where it would help. I thought it would probably help in the firms — by “firms” I mean companies, so let me make this two different things as I’m a talking economist. So, companies I think will move toward having one or two big firms and then a bunch of niche firms here and there to make this work, rather than have a bunch of big firms and a bunch of — they’ll pick their spots. But I had a very interesting conversation with Joe Andrew from the Chairman of Dentons the other day, talking about they brought on a few new small firms.
Elie Mystal: Do you want to talk about like accreting in the solar system?
Joe Patrice: Yeah.
Elie Mystal: Dentons is calling gravity upon itself.
Joe Patrice: Yeah, a massively growing over the last several years firm, but also a firm that makes this growth in a different way as opposed to the typical system of we through an office somewhere and that office’s job is to more or less throw work back to headquarters. They actually — I’ll just use the most recent mergers, tie up, whatever it is.
To use those models, the way they did it was a dual partnership model where the firms that they tied up with continue to exist as the firms they always were basically with the word “Dentons” thrown into it, and they will also be while partners of their own firm locally owned, they will also be partners of the Dentons overarching. So this kind of dual partnership model which in their mind allows the firms to maintain their local ownership and this is something that is important to them and you see it in their recent agreements in both Korea and across Africa, they brought on five African firms all of which are not — hey somebody from the New York office, you are now moving to Seoul. They were instead locally owned Korean firms that continue to be locally owned but those folks are also partners of the overarching thing.
Elie Mystal: What’s the advantage of doing it by the way?
Joe Patrice: And the argument that they had — that Joe Andrew made, which I think is compelling in the light of this in-house discussion was these clients aren’t necessarily all in New York or wherever, they’re spread out and they want to go to the people they know. They want to go and the people they know are the people are going to understand the communities and what’s going on and be able to get the work. They know what’s happening, there’s talent there as well as community knowledge and those folks are who — an in-house counsel really wants to work with, that’s somebody they know and it’s more like the big four model.
PwC is global bigger than all of these law firms, it still has offices in Podunk City somewhere that probably sounded bad towards those cities. Hazy city somewhere.
Elie Mystal: You meant flyovers?
Joe Patrice: Yeah — no, but, whatever, it has agents in some of these smaller markets and that’s not because PwC doesn’t get it that it’s really about the big places. No, they understand it’s important to have a local presence if they’re going to get the accounting work, business consulting work, all the professional services that they provide.
Dentons’ logic is, if every other professional service is being run this way, it’s silly that we in law don’t consider ourselves better than that. We aren’t, we should be looking towards a situation where we empower local lawyers within the structure to be able to make those individual connections and then make those connections much as a PwC or any other of those companies would say, yeah, I’m the person running your thing, but I can leverage folks all over the world if needed, and you know, when you listen to this set up, it really makes a lot of sense especially in light of these in-house counsel trying to cut back on the number of firms they want to have.
Elie Mystal: What rhymes me of is just — and it’s something that I think people who aren’t in the in-house game or who aren’t in the legal game and trying to figure out how everything actually like fits together and works. What it reminds me of is never forget how “ancestral” is not quite the right word, but how close the legal community really is. If you can imagine like a Fortune 500 company, trying to figure out — it’s going to buy new cars for all of its employees, let’s say. You would imagine that the massive company would go to Ford, and go to GM, and go to Toyota, and like cross-compare and figure out who’s going to give them the best, could imagine like the Fortune 500 company doing all of these things to buy even a perk for their employees.
But, when it comes to the law firms they use, it’s not some kind of like nationwide search for the best law firm at blah blah blah, it comes down to like, well, we hire this in-house counsel for whatever reason we hire, right?
Joe Patrice: Outside yeah.
Elie Mystal: Right, and then that in-house counsel, that GC knows —
Joe Patrice: Oh I see.
Elie Mystal: Right, that GC that this Fortune 500 Company hired knows like eight lawyers and four of those lawyers work for that firm. So now this Fortune 500 Company has like 50% of its legal work going to one particular big law firm because the GC knows them —
Joe Patrice: Well, I mean, that was certainly the old model.
Elie Mystal: Right, it seems so — it’s so networking based as opposed to kind of in any kind of real objective analysis of who’s doing the best? What? Where?
Joe Patrice: Well, that was certainly the old model and I think that has broken down, that we’ve seen over the last 15-20 years or so, that has really broken down and those relationships partially because legal departments got bigger, there’s more people moving around and there’s a — there’s a better flow of information. So a lot of those relationships broke down and we have been kind of talking about it in the lines of, oh, those days are over, it’s not about that kind of networking, it’s more objective, your costs, your return on investment, they’ve got data up the wazoo, they can tell, whatever.
This argument that Dentons is banking on and what this survey kind of suggests they might be right about is that the networking that broke down was the nonsensical networking of, I don’t know, I’ve heard of crevasse. That kind of networking has broken down, what hasn’t broken down though —
Elie Mystal: It’s the local connection.
Joe Patrice: If somebody who can actually tell you, oh, I understand what you do, a factoid that I heard that is — intellectually you know, is true but then when you hear it, you’re like, oh wow, America in particular and this is true all over the world in different places to different levels. But say in the UK, 70% of the major British companies are headquartered in London, that’s obvious what happens.
In the U.S. you take the Russell 3000 whatever, 7% are in New York. There are major companies everywhere. I was in Lexington, Kentucky the other day, I passed a building for the printer company, Lexmark, and I was like, oh, but that’s 00:28:57 from here. I’ve never known that but that’s a thing. A major company that you interact with, whatever you printed things back in the day, you didn’t necessarily know where they were from and that’s where understanding the local challenges especially when — yeah if you’re doing an IPO you probably want somebody in New York. But companies face challenges that are much more local to them. Real estate deals, zoning issues so on and so forth which you’d want somebody who understood what was going on there.
Mergers tie-up supply chain deals, people who understand the area.
Elie Mystal: Isn’t that — but to push back a little bit on the 00:29:35 model, isn’t that what we used to just call Local Council?
Joe Patrice: Right, and that’s the issue. Local council though was when those folks hire the central Metropole in this example, New York hires somebody whose job is to have no thoughts but to sign a document and put it and hand it to the court. That’s not a particularly effective model from a strategizing perspective and moreover you know what it does for the in-house counsel, adds a layer.
Now, you’re paying another — you’ve got another mouth to feed. You’re not paying the person who’s doing your work for you, you are paying somebody to hire another person to do work for you. You cut out that kind of the retail model there and you’re going wholesale in this sort of setup which if for companies who are increasingly nervous about how their spend is, that makes some sense. I don’t know how it’s going to necessarily turn out, but I certainly after chatting about these mergers with him and then having seen this study, the day before. In my head it all kind of clicked together that you can’t really argue that this isn’t reflecting where in-house counsel will at least see themselves right now.
Elie Mystal: Absolutely. Check out the story in Above the Law, it’s really interesting because as we’ve been trying to talk about like it challenges some of our assumptions as to what in-house counselor people are thinking — are feeling and certainly it challenges the assumption that they give a shit about privacy because of Jesus Christ.
Joe Patrice: And yeah, and there’s a link there to download the actual report too. If you want to get into the details and don’t necessarily want to take my analysis for it, and there’s a lot more data points in the actual report that I didn’t even get to.
All right, so, with all that said I think we’re done. You should be listening to this, which you are, which is great, but don’t stop there, you should subscribe, you should give it reviews, it helps us move up the chain of command in the search for a legal podcast. You should be reading Above the Law, you should be, you know, interacting with us, he’s @ElieNYC, I am @JosephPatrice.
If you have any questions you want us to potentially talk about by all means, write them two tips at abovethelaw.com, you can say, you know, Thinking Like a Lawyer mailbag or something and we always are interested in potentially having some material to discuss that with. You should also listen to The Jabot which is Kathryn Rubino’s podcast also the Above Law Network of shows, I guess, which is all part of the Legal Talk Network which also has a series of shows that don’t involve any of us Above the Law people, but you should be listening to those offerings as well. And with all that I think we’re done.
Elie Mystal: You guys have a nice one.
Joe Patrice: All right.
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