The legal department is the client of outside law firms, but excelling in the delicate and important role that connects the two is an art that requires considerable practice. Shanghai Huarui Bank Board Secretary Hang Dongxia Explains the Right Mindset to Successfully Manage and Work with External Lawyers
IN ALMOST FIVE YEARS of practice as a professional lawyer in a law firm, this author has interacted with different types of businesses, such as state-owned construction companies, private fast-moving consumer goods chains, government departments, life insurance companies, etc., and their legal staff. I have also worked as a corporate lawyer for almost 17 years, cooperating with many domestic and foreign lawyers from the United States, Singapore, Hong Kong, South Korea, Japan and Australia, the work covering both dispute resolution and investment/M&A.
I have cooperated with an even larger number of national law firms, working with red circle firms, large local firms, specialist law firms, local individual firms, etc., depending on the nature of the work , essentially covering all major ongoing legal cases. On the basis of these different views and works, this author proposes to answer the question “how to create a win-win situation with external lawyers”, from the point of view of the in-house lawyer, through an in-depth reflection and a synthesis of this practical experience.
KNOW YOURSELF, KNOW THEM
The first step in achieving a perfect match between in-house lawyers and external lawyers is to “know each other and know them”, ie to minimize the information asymmetry between the parties.
For in-house lawyers, “knowing yourself” translates in particular into the clarity of what is needed: What is the objective that the company wishes to achieve through the services of external lawyers? What dilemmas and shortcomings does the company face in this work or litigation? What resources, including a financial budget, labor cooperation, etc., can the company provide to achieve the goal or resolve the conflict? What internal decision-making process should the company follow to accomplish the task at hand?
To accurately answer these questions, corporate lawyers must conduct a thorough analysis and deconstruction of the work to be done, and uncover the heart of the work and the subject matter of the dispute, which is the first step to finding the right law firm. of lawyers. and lawyer.
The “knowledge” by corporate lawyers is reflected in the understanding of the extent to which the chosen firm and lawyer are suited to the task.
First, the extent to which the professional capabilities and level of business segmentation of the law firm and the lawyer match the business requirements of the business – this requires corporate lawyers to have a realistic assessment and knowledge of aforementioned true capabilities of the law firm and attorney. In countries and regions with which in-house lawyers are not familiar, carrying out the aforementioned assessment is not easy and requires significant research and comparison work.
Second, the extent to which the firm’s internal financial budget matches the law firm’s quote – in practice there will generally be significant variation in the quotes given by law firms of different sizes and in different locations , for the same legal issue, so how to judge the performance-to-price ratio of law firms and how well it fits the budget are also issues that corporate lawyers need to focus on.
Moreover, there are significant differences in the mode of payment of legal fees in the quotes provided by different law firms, such as installment payment, calculation of performance bonus, payment base figure under different scenarios , etc., so how to determine which method of payment of legal fees best suits the business of the business is something that in-house counsel should consider carefully.
TRUST AND RESPECT
An essential prerequisite for a win-win situation between the works council and the external lawyers is that trust and respect permeate the entire cooperation process.
Although in-house and outside counsel work toward the same outcome on a case, the work environments they each find themselves in are different. Corporate lawyers face more pressure from the board or senior management of the company, while outside lawyers face pressure from courts and counterparties. The author advises against corporate attorneys and outside attorneys channeling their own pressures on each other, as this not only does not help the situation itself, but is likely to lead to animosity between the parties.
Corporate attorneys and outside attorneys need to fully communicate about every detail of their work, not just guess what the other party may be thinking or pass information on to others. Only the most complete communication can establish a basis of trust. When a decision is required on the details of the work, the company lawyer should try to carefully consider the advice of outside lawyers and consider the factors that go into the decision from several angles. As for external lawyers, they must put themselves in the shoes of in-house lawyers and take into account the particular nature of the decision-making environment in which in-house lawyers find themselves in order to avoid giving legal advice that lawyers business cannot accept or are impractical.
It is normal for corporate lawyers and external lawyers to have different perceptions and differences in terms of performing specific work and project details, and sometimes such differences cannot be concealed, so that both must seek common ground while reserving differences, and then proceed to achieve consensus on decision and operations.
Communication is conducive to mutual trust, but respect is the only way to build cooperation. Whether it’s a senior corporate counsel paired with a newcomer to the law firm or a senior law firm partner paired with a new in-house counsel, both parties are always in a cooperative relationship, so trade on an equal footing and teamwork should be the watchword. If the older party, based on their own reputation and status, crosses the line, treating the other party as an underling or “gofer”, each will lose respect for the other and destroy the foundation of trust, making effective long-term cooperation impossible.
Mutual respect is not just a verbal courtesy, but should permeate all routine work. For example, when a corporate lawyer designs a working arrangement, he must give due consideration to the position of the other. If a matter isn’t urgent, isn’t it a bit disrespectful to email an outside attorney on Friday night asking for a response by early Monday morning?
MANAGEMENT AND EVALUATION
Corporate lawyers must effectively manage and regularly evaluate outside counsel. The main management tools are the management of lawyer pools, annual inspections of legal services and audits of lawyers’ fees. The main subjects of evaluation of external lawyers by the works council are the reasonableness of the fees charged by the lawyers and the quality of the legal services.
Lawyer pool management is a relatively common management tool. The establishment and changes to the pool of attorneys should be determined in light of the company’s business needs, and certain alternate arrangements should be retained should the need arise.
In particular, in some companies, business, sales and certain other departments have the power to hire lawyers and pay their fees, which makes the inclusion of law firms and lawyers in the pool of lawyers of great importance. The establishment of the inclusion criteria and the mechanism for inclusion and removal from the pool of lawyers will ultimately determine the quality of legal services and the outcome of the work.
The audit of attorneys’ fees is also a key topic in the assessment of law firms by in-house lawyers. Billing methods for lawyers in different countries and regions vary greatly, so corporate lawyers cannot expect to negotiate prices with all law firms based on one billing model. Additionally, even within a region, billing methods can also vary significantly due to different representation methods.
Thus, the works council must examine whether the activity and the mode of representation match, in order to determine whether the methods of invoicing of the law firms are reasonable. The corporate lawyer must additionally make certain predictions as to the future direction of a project or a case, especially in a scenario where the fees for legal services are paid in installments. There must be an appropriate mechanism that can match the fee payment schedule with the work progress schedule.
The works council’s assessment of the quality of the services provided by external lawyers is the most important part of management work. Corporate lawyers must establish an evaluation system, evaluation criteria and evaluation measures. For example, common evaluation metrics such as “response time”, “meticulousness of communication”, “completeness of documentation”, etc., should be applied equally to all audit firms. lawyers from the group of lawyers. However, with regard to the evaluation of special projects and special cases, special evaluation measures must be formulated on a case-by-case basis.
It should be noted that work results and case results are not the only evaluation parameters. Evaluation scores and ratios must therefore be appropriately constrained to objectively and rationally assess the quality of law firm services.
Lawyers and outside law firms should also conduct annual reviews of the companies they provide services to and, from a market perspective, law firms should review and negotiate with clients who show poor performance- prices and those that present higher legal career risks. .
The author has just published a book entitled The path to business consulting, which systematically describes the professional orientation and skills related to the profession of in-house lawyer. A chapter of the book details cooperation models between corporate lawyers and outside lawyers, cites a number of cases and shares some management tools and models.