In the spirit of generosity, which I hope is an active presence in your life but which is conspicuously abroad at this time of year, a regular reader granted me permission to share some of his reflections prompted by the recent column, “The End of Leverage?”.  I have very gently anonymized it for self-evident reasons, but I hope it gives readers a chance to reflect on whether they recognize themselves in what follows.
Merry Christmas, everyone!

Hope all is well. Long-time reader/fan of your site (first as a Vault 100 associate, and now as an in-house AGC), and we’ve exchanged several e-mails over the years. As I read through your “End of Leverage” post (which is fantastic, as always), I wanted to chime in with another data point on #1. I know you mentioned that many in-house departments push back through billing guidelines that mandate, e.g., no first-year associates. While we do have billing guidelines, over the years we’ve relied on them less and moved more towards a “trusted partner”-type model.
My perspective is that if I’m working with a law firm where I don’t trust the partners to appropriately vet their bills such that I need to comb through them, is that really someone with whom I want to do business long-term? I’d rather work hard to find outside counsel I trust, and then rely on their good sense and ethics to appropriately staff and bill me. Finding a trusted law firm is about as hard as finding a trusted auto mechanic. And once you find one, you become fiercely loyal, send all your work their way, and refer all your friends. Isn’t that, in the long run, the proper way for firms to position themselves?
That is, it seems to me the better value proposition for a firm to pitch is, “We will treat you fairly and work with you to maximize your long-term success, knowing that your success enables our success” rather than “We will slavishly comply with whatever ungainly billing guidelines you generate, as long as you keep an eye on us and catch us if we slip up.” Call it the Wachtell model rather than the standard BigLaw leverage model–so I’m reaching the same conclusion as your piece. I see immense value from the in-house side of moving away from leverage and towards longer-term and deeper relationships with trusted advisors.
From my perspective, I see a disconnect from what I, as in-house counsel, want, and what our outside counsel seem to think I want. I want appropriately staffed and billed actionable information I can take to my business folks; I don’t want to review every invoice to make sure I’m not being screwed and the firm is adhering to the guidelines we made up a decade ago as they send over CYA memos.  I’ve had this conversation many times over the years with people, and a few years back I went so far as to type up a list of “Top 10 Things I Wish Outside Counsel Knew.” Several of these are specific to our business, but I suspect others are generally applicable. I’ll include my list below in hopes it’s of interest to you.
As always, please keep up the great work. You and Bill Henderson are, in my opinion, the two thought leaders when it comes to law firm management/operation/economics, and I always look forward to your next installment.
Top 10 Things I Wish Outside Counsel Knew

1.       Don’t tell me that litigation is uncertain, and you can’t budget my matter. Our engineers can construct a 50-mile transmission line costing hundreds of millions of dollars over 7-10 years with multiple subcontractors, dozens of permits, unknown soil types, numerous construction risks, uncertain legal and regulatory regimes, etc.—all with a 3.5% contingency. If they can manage a project of that size, scope, and complexity within 3.5% over a decade, don’t feed me the line that our run-of-the-mill litigation is impossible for you to estimate, particularly when you pitched me on the fact that you’re the absolute expert on the subject and have handled similar matters a dozen times. Either you’re the expert (in which case you should be able to tell  me what it’s going to cost), or you’re not the expert (in which case I’ll kindly move along). Besides, I have to estimate your costs internally anyway–you might as well as have a seat at the table in determining how much you’re going to spend.

2.       Even more important than the total amount of money budgeted is the cash flow forecast. Each month, I report back to every project manager and update them on how much money we’ll be spending on outside counsel (aka you) next month. We then go out and borrow that amount of money to spend. If you come in over budget, we have a shortfall and have to scrape it up somewhere else. If you come in under budget, we’ve borrowed excess money and paid needless interest. Either way, I’m in trouble. I don’t need budget surprises: I need to know your best guess of what you’ll be spending, and I need you to do your best to stick to it. Company-wide, one of the factors that determines our bonus is how closely (over AND under) we stick to our budgets.

3.       In law firms, lawyers drive the ship. That isn’t so here. We have over XXX employees, and [barely 1%] of them are lawyers. My job is to serve our business partners, and your job is to help me do that competently and efficiently. Often my role is to identify and quantify risks for our corporate folks, then support them in implementing the direction they want to go. Sometimes this means that I don’t get my way on issues, particularly in negotiations with other factors at stake, like reputational or political risk. It can be frustrating, but it’s how our business works. Please keep in mind where we fit into the big picture. 

4.       Deadlines matter. A lot. On a big project, 90% of my interaction with the larger project team is updating them weekly on the progress of my functional area (aka telling them what you are up to). Please don’t make me be “that guy” who misses deadlines every week.

5.       Seriously, people: spell our company name correctly. No commas. I know it seems wrong—I didn’t come up with it, and it is what it is. When we’re paying you millions of dollars to represent us, I don’t want to have go through your brief and remove commas.

6.       I really do appreciate the time you put into making a pitch for our work. We are always actively looking for outside counsel to partner with us. But if you want to get your foot in the door, you need to show us how you add value. Don’t give me a binder with your resumes and make your pitch be, “We have smart people who were on law review at good law schools. We handle lots of complicated things and are admitted in lots of jurisdictions.” That’s great and all, but how does that differentiate you from the other dozen law firms that made that same pitch last year? It’s not like we’re otherwise hiring semi-literate people. Show me where you can add value beyond having talented people! What templates, processes, billing/staffing arrangements, KM, etc. do you bring to the table?

7.       At any given time, I may be involved with a dozen or more active projects. I’ve retained you on only one. This means that while I know big-picture what we’re doing on this matter, I’m not always as sharp on the details for each project, and I need to rely on you to help me filter what I actually need to know. That way, when my boss and I ride the elevator together, I can give him the 30-second status update with the relevant high points. 

8.       Contrary to what you may have heard, I don’t care if you bring four people along to a meeting, as long as four people are justified. I won’t nickel and dime you on bills. Just use good judgment. If we get the sense you’re churning the bill, we’ll fire you and get another law firm.

9.       If you send a memo to me that includes a sentence along the lines of, “This is a tough call” or “This is a close question,” I will seethe with rage; there is a special level of hell reserved for outside counsel who give wishy-washy answers. I know it’s a close call! If it were an easy one, I would make it (since my internal rate is, like, six bucks an hour or whatever). If I’m paying for you, it’s because it’s complicated. Put your malpractice insurance on the line and give me something actionable I can take back to my business partners. If you’re not comfortable exercising judgment and giving advice, you may be in the wrong line of work.

10.   When we find outside counsel who are willing to partner with us, we are fiercely loyal. It’s like finding a good car mechanic—you keep going back and referring your friends even if on some issues the cost may be higher. There is immense value in trusting their judgment and knowing you will get quality service. We place a premium on that, and once we find someone who gives us that service, we will absolutely go to bat for them and work hard to retain them on everything going forward. 

I’m a mild skeptic when it comes to New Year’s Resolutions; I think they tend to be trivial, mere cheer-leading, or honored in the breach.  Nevertheless, all rules are made to have exceptions (and my skepticism isn’t even tantamount to a “rule”), so I suggest readers so inclined resolve to come back and re-read these thoughts periodically.  With luck, you will recognize yourself less and less on each occasional revisit.

Happy 2018.

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