New England Biz Law Update
What changes when lawyers go in-house? Much of it boils down to how you approach legal decisions.
Below are perspectives from three lawyers whose experiences in going in-house may guide new in-house counsel. (The names and some of the facts have been modified.) Their experiences have one central message: When you understand intimately how each legal decision is going to affect day-to-day operations, you will be in a position to team up with outside counsel to serve your company better. And that reflects well on you.
Linda: Linda made the transition from partner in a 40-lawyer firm to assistant general counsel of a large insurer, where she manages litigation.
The first thing she noticed was that outside-counsel costs were out of control. While in private practice she had tried to be sensitive to the needs of her clients and costs of her litigation services, including pass-through charges for couriers, overnight mail and large copying costs.
But when she went in-house, law firms she worked with were not always sensitive to how the cost of the hours and related expenses they billed affected her company. They also failed to see how that cost reflects on the in-house lawyer who has to answer to a budget.
Counsel fees and expenses can raise questions about the judgment and managerial skills of in-house counsel.
As Linda puts it: “How I am viewed is based, in part, on how I manage outside counsel. I have to question both the work and the fees. Why take depositions in this case? Do we really need this much discovery? Shouldn’t we have a discussion with the other side before scheduling two days of mediation?”
Linda’s big lesson? She had to make her expectations clear, which meant she had to first get them clear in her own mind. It also meant communicating them in a way that her outside lawyers would understand.
She realized that she had to sensitize the lawyers who served her company to its real-world needs. If those lawyers didn’t want to develop the sensitivity, her company could switch to a law firm that would.
Stewart: Several years out of law school, I moved to my first in-house job. Early on, I had to complete a ground lease that was necessary for expanding my company’s own office space. Negotiations were protracted.
As we approached the drop-dead date for breaking ground before winter, we still had not resolved a number of legal issues that I thought were important. But our office space was cramped, our people were overworked, and if I did not sew up that lease on time, we would have no room for the additional staff we needed to hire.
Some costly computer equipment purchased far in advance would gather dust in storage. And the promised exercise room would not be built for another season, which my colleagues would be unhappy about.
While I was contemplating all that, my company went ahead and ordered the steel necessary for closing in the structure before winter. As outside counsel, I might have advised against ordering that steel: Why make that kind of capital outlay when the deal was not done yet? But, inside the company my perspective was changing. My job was to get the legal part of the deal done on time, even if it was not perfect.
I swallowed hard, accepted terms that I doubt I would have approved as outside counsel, and we got the lease signed in time to finish the first stage of construction before winter hit.
What did I learn? To get a deal done, companies take legal risks from which law-firm lawyers might shrink. Executives have to make decisions – often with imperfect information – and they don’t wait around for ideal legal conditions.
In a law firm, I was concerned that if I let go of some legal detail, it could come back to haunt me. Inside, I had to balance the legal risk of ugly terms against business-timing needs.
Michelle: She moved from litigating in a large firm to managing litigation in a software-development company. On litigation she was handling, she now had the final word. Partners who had managed her now were hers to manage.
She now could decide who would work on her cases, how much energy to put into discovery, when to mediate and whom to use as mediators.
Michelle also had to make business decisions as well as pure legal ones. She needed to bring practical business judgment, including her intuition, to bear.
Her lesson? Michelle now was the client, and she had to learn to think like one. As outside counsel, she had not been privy to all information about the human and business implications of her decisions. Also, as outside counsel, she had provided the legal services and then moved on to the next matter. Inside, she personally would have to live with the effects of her legal work for quite some time.
Conclusion
Going in-house counsel requires you to think like a client in addition to your role as a lawyer. Apply these lessons and learn from colleagues to make a smooth transition.
Stewart Hirsch coaches in-house counsel, law-firm lawyers and company executives. He also provides strategic and tactical consulting and creates team-building workshops. He is a member of the New England Corporate Counsel Association. Stewart can be reached at [email protected] or 781.784.5280.
