I had the distinct pleasure of presenting at the New York Bar Association's Fall Intellectual Property Conference in Philadelphia. I was joined by Anil George, Senior Counsel for IP at NBA Properties. Our presentation was on the business of law and the current trends in the relationship between corporate counsel and outside counsel (hat tip to BTI Consulting Group for making available their latest Premium Practice Forecast survey- worth getting a copy).
[Note: This post originally appeared on the Lawyer Up! blog in the fall of 2011.]
This presentation led to some interesting comments from Anil describing a situation in which an attorney gracefully recovered from a sticky situation. The situation? The Chief Legal Officer thought the bill was too high. The law firm lowered the bill and explained that they were doing it to preserve the relationship with the client. Anil's point was that the law firm took a short term loss in order to invest in the long term relationship- something not lost on him, in fact, a cementing gesture in the relationship.
While the lesson was important, the discussion that followed was even more revealing. One law firm attendee asked whether the bill was sent in one lump sum or whether it had been broken into pieces and whether it would have made a difference were the bill to be sent broken into monthly increments. 'No', Anil said. It wouldn't have mattered. What he didn't say, but surely was thinking, was that his Chief Legal Officer was capable of simple math. The lawyer in the audience was thinking that the substantial amount of the bill may have raised eye brows and thereby the solution was to send bills that were more likely to 'sneak under the radar' (my term, not hers). Clearly the large bill caused notice. But breaking it up doesn't reduce the total amount.
Still, the law firm handled the request well and salvaged an otherwise difficult conversation. But, let's agree, this was a law firm's attempt to recover. It still chalks up in the 'save' column. The question is, 'could this have been avoided altogether?' The answer is yes. Anil, a typical in-house attorney, shook his head in agreement as I suggested that the issue was not that the fees were too high, the problem was that the CLO did not see the value the company received from the law firm's handling of the matter.
Lawyers identify the problems that company's face and present solutions to address those issues. But rarely do they have the intimate knowledge of the implications of those problems to the business. Indeed, corporate counsel have a finer filter they apply to solutions. As Anil put it, 'lawyers who develop a solution in the unique context of my business set themselves apart'. Anil is alluding to the knowledge of the implications which could result from the solution or, conversely, the implications which might result should the right solution not be found. Understanding the implications of the solutions is the essential ingredient to mapping the value of the best solution. Lawyers that have learned enough about their client's businesses to understand the implications will be able to monetize their solutions. They can show, in business terms, how the solution creates or protects value for the company.
Had Anil been able to take a large bill to his CLO and been able to show how they projected a 7:1 return to the company's investment in this firm handling this matter, for instance, the entire conversation would have been transformed. And, the CLO would have had the ammunition he needed to face the CFO or CEO and defend the large bill. Without that, the CLO knows exactly what's on the minds of the CFO and CEO and was simply arming himself for that conversation by extracting a discount from the firm.
The frustration that many corporate counsel express about their outside counsel is that they present the scope of possible solutions but fail to make a decisive recommendation. Instead, they leave that to corporate counsel to figure out. To make a decisive recommendation, you must be able to reasonably project outcomes, monetize the results and calculate the best investments among the various options. Law firms deeply experienced in the issues and variables in specific types of matters or cases, should be able to project reasonable outcomes. That's the dividend of experience. And if you have a wealth of experience in an area, use it.
Lawyers who outline the various options demonstrate their understanding of the company's problem. Lawyers who commit to definitive recommendations demonstrate they have an understanding of the implications of the problem and have calculated the best investment of the company's resources. And that sets a lawyer apart as a true business partner.