You Need Lawyers to Draft Dox or Go to Court — But Prevention of Legal and Regulatory Trouble Requires Systems and Cost Disciplines (Part II)

While wrapping up Part I of this two-part series I learned through a friend about a sizable family business here in Chicago that has consistently sent its legal work to one of the most prestigious law firms in town — very capable lawyers — with whom I’ve worked directly.

For what seemed like a routine employment matter — these prominent attorneys had proposed litigation on a scale out of all proportion to the problem presented.

And the legal fees — the client’s executives feared — would similarly be on a scale out of all proportion to the problem they faced.

They needed an alternative — and met with a sophisticated sole practitioner who acts as outsourced general counsel to privately-held businesses between $10 million and $50 million in revenues.

She talked in plain terms about what most law firm and in-house lawyers feel uncomfortable discussing — and most don’t think about at all:  How to place their single, immediate problem within the management context of the whole business.

And how to fix it so that it doesn’t recur with other employees.

And how to set predictable, reliable legal fee expectations for the client.

To anyone who’s been a general manager — to anyone who’s had to manage to a P&L — this kind of thinking is second nature. It’s a mindset.

But practicing lawyers in firms or in-house aren’t trained to work this way.

Professor Bill Henderson of the University of Indiana Law School described the lawyer mindset this way:

” … In-house and law firm lawyers … have the same go-to move — stand back and let me lawyer … The lawyer theory of value — solving legal problems one at a time with smart lawyers — is an unstated and unexamined preference of lawyers, not a viable long-term solution for the clients they serve.”

In other words, in-house and law firm attorneys are artisans. They’re craftsmen and craftswomen. They’re trained as carpenters and not architects — as cello soloists and not orchestra conductors.

This is not a value judgment. It’s just a description of who does what the best.

The legal and regulatory function needs management systems and cost disciplines that most attorneys — acting on their own — can’t give them. To quote Professor Henderson — the legal and regulatory function needs, “a viable long-term solution for the clients they serve.”

After 10 years of practicing law I accepted a corporate client’s invitation to run one of its divisions.

Early on I was “managing” the closing of a major transaction. At least I thought I was.

The chief operating officer took me out of the conference room:

COO:

“Knock it off!”

Me:

“Knock what off?”

COO:

“You’re acting like a machine operator!”

Me:

“What?”

COO:

“You’re trying to do everyone’s job for them.

“Stop it!

“I need you to help me run the whole machine shop!”

As a rookie general manager with 10 years of “stand back and let me lawyer” as my own “go-to move” — I had a lot to learn.

So I sympathize with the vast majority of lawyers who don’t know how to run the machine shop — for whom design of management systems and establishment of cost disciplines is beyond their skills set.

But someone (else) needs to do it.

A biographical note about the sole practitioner described above:

Before becoming an attorney she’d been general manager of a real estate development business — getting the books balanced, negotiating deals and making sure that employees knew their jobs and were doing them.

One more piece of evidence that a general management and P&L background is helpful — maybe necessary — to bringing systems thinking and cost control into the legal and regulatory function.