You’re fired!

Sometimes a company’s in-house counsel knows that his or her relationship with a private law firm or lawyer is just not going to work. Maybe the employment contract negotiations were a little off, or the bill had an unexplained charge. Or maybe the outside lawyer’s work seemed blatantly unprofessional, as it did to Christine Hughes, general counsel at Emerson College in Boston, after she hired an attorney to handle a contract dispute on behalf of the school.

“The lawyer consistently didn’t copy me on letters, even after being asked to,” Hughes told a roomful of lawyers during an in-house counsel panel discussion sponsored by Massachusetts Lawyers Weekly. “There was a distinct undertone of ‘little girl, we know better than you.’”

After a failed attempt to set him straight, Hughes had no choice, she said, but to “fire” the attorney midway through the negotiation. In an uncomfortable conversation, she told him exactly why.

“I would be candid,” she recommended. “This is a partnership.”

In-house counsel as ‘interface’

Hughes tells New England In-House she is willing to be so forthright with outside counsel because she is “the interface between the legal world and a client.”

“I’m the one who is supposed to explain: ‘This is how communications work in my institution; please honor that,’” she says. “And when a law firm doesn’t do it, I’m ultimately accountable and responsible for what the law firm does. I’ve selected them, I’ve approved their bills, and if they’re not doing their job, then, to a certain extent, I’m not doing mine.”

Hughes was alone among the four panelists in her approach to wayward outside counsel. The other three expressed some hesitancy over whether they would explicitly “fire” an outside firm or otherwise offer criticism of their work.

Mark T. Beaudouin, general counsel at the Waters Corp., a Milford, Mass.-based company that makes scientific instruments, says he would not bother to tell a small firm working on a one-time transaction that it was doing something wrong; he prefers to let it quietly fall off his radar screen in the future.

“My little mantra here is, it’s not my obligation to call you up and say this to you,” he tells New England In-House. “Many of us in our private lives would rather avoid confrontation. The way you avoid confrontation is you simply don’t tell them.”

These varying approaches demonstrate that, while most in-house lawyers agree that outside firms and in-house counsel should consider their relationship a partnership, they differ about how open and honest they should be when that relationship goes sour.

‘That’s the attorney’s problem’
In-house lawyers are constantly balancing the concerns and wishes of their companies with those of the outside law firms they retain, and usually they manage to head off problems before they become fire-able offenses, says Paul G. Cushing, president of the Northeast chapter of the Association of Corporate Counsel and a litigation compliance officer at Partners Healthcare System.

“I think it’s the rare circumstance where you’re going to find yourself in a position where a firm has done something so egregious that you have to ‘fire’ them in the middle of a transaction or piece of litigation,” Cushing says.

John A. Beccia, assistant general counsel at the Boston Private Wealth Management Group in Boston and chairman of the Corporate Counsel Committee at the Boston Bar Association, seconds that opinion.

“That seems pretty radical to just say, ‘You’re fired,’” Beccia says. “I don’t see a lot of firing the outside counsel. It’s more diplomatic to say: ‘Listen, we’ve re-evaluated it; your rates are just too high,’ or ‘our business model has changed.’”

Jeff Coburn, managing director of the law firm consultancy Coburn Consulting, goes even further, saying that while the ideal relationship between general counsel and outside counsel is “a two-way street,” in practice it is not the in-house counsel’s responsibility to tell outside firms if they are making mistakes.

“It’s not the general counsel’s job to make that information known,” Coburn says. “It’s the attorney’s job to know it. And if the attorney doesn’t know if things are going badly and the client is not happy, then it’s the attorney’s problem. Clearly the relationship is not what it ought to be.”

‘Classic management activity’

In-house lawyers recognize that it is difficult to ask for a working relationship from firms without promising total honestly in return, even when it may be unpleasant. When asked about this tension, Beaudouin acknowledges that it does appear to be an “inherent contradiction.” But, he explains, the question of whether to criticize a firm misses the point: that it is all about relationships.

“It’s all based on a human dynamic,” he says. “My outside counsel now is [the Boston firm of] Bingham McCutchen, and I have a great relationship with them that is based on constant dialogue and constant interaction. That’s good.”

A long-standing relationship with a large, prestigious outside firm, he believes, merits more honesty from in-house counsel than does a new relationship with a boutique firm.
“Without sounding too cavalier, I guess it’s more with respect to the smaller firms than in respect to the larger firms,” he continues. “It’s the fact that if you have had a long-standing relationship, you do owe them the favor of saying, ‘This is not going to work anymore for the following reasons.’ Generally speaking, there is a range of legal issues that you give to the large firm, and then there might be a whole range of issues that you’ll farm out to smaller firms. And then, if the job isn’t done to your satisfaction at the smaller firm, you’re simply not going to call them back.”

Ideally, however, in-house counsel relationships with all firms, large and small, would involve clear communication, according to Beccia and Cushing, because all parties bear responsibility for the quality of the relationship. They both suggest that, to avoid the need to fire a firm, general counsel should conduct regular reviews of the performance of all outside firms, complete with feedback and suggestions.

“You need to push communication and keep your outside counsel honest,” Beccia says, “You’ve got to be continually re-evaluating the relationships. You need to really control the fees and the billing amounts, those types of things. It’s incumbent upon in-house counsel to manage that type of relationship.”

Cushing says that such communication can be constructive, if it is modeled after a yearly performance review, much like the annual evaluation one would give to an employee.
“I think it’s important to do periodic reviews of outside counsel, and to be honest in providing feedback, because it improves the relationship and improves the service for the client,” Cushing says. “I think that in-house lawyers should do this as a good management practice because the in-house lawyers are charged with managing the legal service for their client. That is a classic management activity: to evaluate your vendors and make sure that you are getting the best value.”