Articles Posted in How-To Manage Legal / Regulatory

As we both awaited the start of a meeting, I struck up a conversation with the general counsel of a publicly traded company with $2BB in annual sales. We agreed that great law firms and attorneys are available beyond the most prominent brand name law firms.

But my friend was emphatic: Departure from those brand name law firms his client company was used to retaining would amount to a career risk. And — as the ads proclaimed a generation ago — “No one ever got fired for hiring IBM”.

In my most recent blog I recounted an interview with BASF Corporation’s General Counsel, Matt Lepore.

In that interview Mr. Lepore described how he went about ditching the arbitrary taxi meter of hourly billing.

And he described how he secured lower costs and client-friendly incentives through alternative fee arrangements.

I invite your attention again to his words — and I emphasize something that Mr. Lepore slipped in at the end of his interview:

“Whether you are Fortune 100, or a small start-up, if you have a legal need that requires outside counsel expertise, and you have some budget assigned to your department, you can use alternative billing. Maybe you won’t define value the same way that BASF, Microsoft, or GSK would, but you certainly don’t need to value the services you need based purely on an attorney’s hourly rate. And, in my view, you will not be getting the most efficient work product if you do.”

Continue reading

I’ve said many times that the legal industry’s business model is based on the sale of attorneys’ hours: The value of lawyers’ work depends on how much time they take to perform a task. This model benefits law firms’ economics but it’s bad for the client. It results in unnecessarily high charges, overstaffing, and incentives to inefficiency (see here, here, and here — among other posts).

The client company has zero price visibility until the work has already been finished.

And — despite much happy-talk about the “death of the billable hour” and “widespread” adoption of alternative fee arrangements [i.e., some arrangement other than the billable hour] — the billable hour is the legal industry’s standard for pricing its work (see here and here).

So … is it practical for a corporate client to ditch this wasteful practice? If so, what does that look like from the client’s perspective?

Zach Abramowitz of the law company Axiom met with Matt Lepore — BASF Corporation’s general counsel — to talk about this.

Continue reading

Yesterday a prestigious global law firm showcased the baffling combination of brilliant legal expertise and management dysfunction that drives business clients to distraction:  

A “2018 Innovation Hours program, which recognizes up to 50 innovation hours toward billable-hour targets for fee earners”.

This announcement expressly recognized that the attorneys involved in this program — “fee earners” it called them — work for clients under “billable-hour targets” imposed on them by the law firm.

And announced — without irony — its use of “billable-hours targets” in aid of “innovation”.

That it’s common for law firms to impose hourly quotas on lawyers who do the firm’s work — on pain of career jeopardy if they don’t meet that expectation — isn’t news.

Such quotas are Exhibit A for the proposition that when the legal industry values a lawyer’s work by how long that lawyer takes to do his or her job — the legal industry has pitted the attorney’s interests against those of the client.

Did the attorneys working to an hourly quota really think that their client company’s needs required X hours to perform that task — rather than (say) half that time?

Or were individual lawyers motivated by their respective quotas?

Quotas imposed on them by their law firm?

Continue reading

In Part IV of this series I offer the next of my guiding observations as you consider consultations with legal counsel:

3. Be aware of which legal systems might be used to seek access to information that you want protected. Application of the attorney-client privilege — or its non-U.S. counterparts — can vary in a big way from jurisdiction to jurisdiction.

Consider this hypothetical:

  • A U.S.-headquartered corporation has a subsidiary in the Netherlands — and in-house legal counsel at both places.
  • During an investigation of alleged anti-competitive conduct the EU Competition Commissioner seizes e-mail messages between in-house counsel of the Dutch subsidiary and non-legal, business personnel.
  • The U.S. parent and its Dutch subsidiary assert a “legal privilege” to preclude use of those e-mails against them.

Where you have employed in-house legal counsel who communicates with client company employees on a matter of legal concern, the rules governing the attorney-client privilege (or a foreign law counterpart) might well be different in — for instance — the European Union’s legal system as compared with the U.S.

Continue reading

In Part III of this series I offer the next of my guiding observations as you consider consultations with legal counsel:

2. Once you’ve got the attorney-client privilege, take care to avoid losing it through “waiver”.

While in Part II I stated that applying this privilege to a specific situation can be extremely complexlosing this privilege can be really easy. It’s called “waiver”.

How waiver works: Client discloses (all or some) contents of a client-lawyer consultation to a party whose participation is not within the scope of lawyer-client communications otherwise protected by the privilege.

Simple example: Client engages attorney for legal advice and lawyer gives legal advice. In other words, lawyer learns facts from client, client seeks legal advice, and lawyer advises client, in “confidence”.

So far so good. Other things being equal (again, this privilege is extremely complex in its terms and application) — the privilege may apply.

Then … there’s communication about all or some of contents of that client-lawyer consultation with someone who happens to be outside the scope of lawyer-client communications protected by the privilege:

Continue reading

In Part I of this five-part series I wrote that business owners and executives need to take the lead in protecting their companies’ proprietary information — and their own as individuals — from the legal system.

And that opposing litigants, criminal prosecutors, and government agencies are all too ready to access information that may place you in civil, criminal, or regulatory jeopardy.

So you need to be proactive in reaching out to your lawyers on this. And don’t even think about DIY lawyering because application of this privilege to a specific situation can be extremely complex

In Parts II through V I offer guiding observations as you consider consultations with legal counsel:

  1. Make sure that you know who the client is: Is it a business entity that you own or work for? Or are you — as an individual — the client?
  2. Once you’ve got the attorney-client privilege, take care to avoid losing it through “waiver”.
  3. Be aware of which countries’ legal systems might be used to seek access to your proprietary information. Application of the attorney-client privilege — or its non-U.S. counterparts — can vary in a big way.
  4. In some circumstances here in the U.S. you may be better off consulting a lawyer in outside, independent, private practice rather than in-house counsel — because of the way that the courts respond to those two types of attorneys in their application of the attorney-client privilege.

Continue reading

This five-part series is an extended plea to business owners and executives: Protect your company’s proprietary information — and your own as an individual — from the legal system.  

Two key points:

1. It’s your job to initiate the conversations with the right lawyers that will secure the protections of the attorney-client privilege. Be proactive here. 

2. The only legal “rules” governing this privilege consist of broad generalizations. Their application to a specific situation is up to an individual judge’s “discretion” based on the unique set of facts before the court.

You need skilled legal advice on how a judge might exercise that discretion in your situation. So protecting confidential information is no place for do-it-yourself lawyering.

Let the attorneys do their job. In fact: make the attorneys do their job.  

Continue reading

Last week — when I read that its General Counsel Jeffrey Carr was calling the shots for the law function in targeting 50% savings in Univar’s legal spend — I took notice.

I believe that the single most important success factor in the ElevateNext / Elevate Services / Univar collaboration is that the client’s law function is being led by a business guy — not someone whose perspective is confined to practicing law.

I write Part III of this series from a strong personal viewpoint. My  comments here are based on observations over the years about how companies are well served — or badly served — by their lawyers.

Besides reading what’s in the media and press releases, I have no special knowledge about this particular venture (though I have met and spoken with some of the participants in the past — long before this announcement was made).

Following my own experiences as a practicing lawyer and later as an executive (see more here), I’ve concluded that attorneys are good at deploying technical legal expertise, but that they are unskilled in managing people, poor at cost control, and are either uninterested or undisciplined about proactive liability prevention.

This was not always my view. As a practicing lawyer I never questioned the way that lawyers in law firms and in-house conduct companies’ legal affairs.

Then I accepted a corporate client’s invitation to run one of its divisions.

Continue reading

The bold collaboration I described in Part I of this series among Univar’s General Counsel Jeffrey Carr, the law firm ElevateNext, and law company Elevate Services is just the latest chapter in legal innovation for each of them.

Their respective lengthy and successful records of accomplishment in legal innovation are important.

As with most other things in life, it’s more instructive to watch what folks have actually done than listen to what they say.

The law firm:

Nicole Auerbach and Patrick Lamb are founders of the new law firm announced in connection with this collaboration: ElevateNext.

Auerbach and Lamb co-founded Valorem Law Group, LLP, a litigation boutique which since 2008 has pioneered something that lots of law firms tout but that few actually implement: Alternative legal fees — they don’t bill their clients by the hour.

Lawyers’ ability to tell clients in advance what they can expect from those lawyers — and then stand behind their commitments commercially — is an underdeveloped skill in the legal industry.

Continue reading