Friday, June 7, 2013

10 Commandments

I get a lot of visitors to this blog from the key word search "how to manage outside counsel".  Indeed, that seems to be a question at many in house focused CLEs as well.  With the pressure on us in house folks to keep costs down but results up, we have no choice but to figure out how to better manage our outside counsel.  In the process of figuring out how to do that, I've come up with a few universal requirements.  These Commandments apply to any type of matter that I might send to outside counsel and the goal is always to achieve the best results for the best value.  Note that we don't always go with the cheapest hourly rate or the snazziest alternative billing proposal.  But we do consistently look for a partnering with a firm that wants to work with us to get the most value we can for our companies.  So in no particular order (they are equally important):

  1. Know my industry.  I don't expect you to fully understand every motive behind every business decision.  That's what we do in house, we don't need you second guessing the decisions our company makes.  However, I do need you to understand the industry in general and who the players are.  For the most part, my firms need to know who my top competitors are and not represent them, or seek to even in non-adverse matters.  Nothing will lose confidence in a firm more than name dropping a competitor to one of my business partners.  They don't trust lawyers as it is - don't give them more reason to be suspicious.
  2. Do not over-bill.  I know this seems like it shouldn't be an issue in 2013.  But it is.  Apparently not all in house lawyers scrutinize their invoices, so some outside counsel don't think twice about the amount of time they bill for a matter.  It took that 2nd year associate 6 hours to draft that trademark application so of course they're going to bill for all 6 hours.  However, I know that if a more experienced lawyer had done it, it would have taken 1 hour.  And if I had done it, it would have probably taken me 45 minutes.  So when I see 6 hours on the invoice I get very annoyed.  Where's the value in that for me?  Look at every line item and only charge me what is reasonable even if your team was inefficient about it.
  3. Don't double charge me.  I get that firms have to train their new associates and that's how we get good lawyers.  But here's the thing - I don't want to pay the tuition for that education.  I'm already paying hundreds of dollars an hour for a newbie that doesn't know anything, why do I also have to pay for the partners time to correct all of their mistakes?  If you are reviewing a subordinate's work or 'catching' up on the case so you can call me and pretend like you're tuned in, cut your time in half (at a minimum).  If you're involved in a deposition or call because you're supervising your junior attorney to make sure they don't make any glaring mistakes, bill me for your time and write off theirs.
  4. Staff appropriately.  This crosses several service industries, but law firms are not immune.  I should not be paying partner rates for fill in the blank forms.  At the same time, I'm more than willing to pay the partner on the case to lead the critical deposition in the bet-the-firm litigation.  Understanding the difference should be intuitive, but if it's not - ask me.  This is one of those things where there won't be forgiveness later.  
  5. Be transparent. I hate getting invoices with line items like "Attention to matter 2.5 hours" or "Discussion about...".  With a passion.  I refuse to pay for that - ever.  Giving the benefit of the doubt, it's probably research and drafting or even meeting with the team members to strategize.  But what it sounds like,  "I thought about the matter in the shower and on my commute to work today so I'm going to bill the client for it."  Give me enough detail on the invoice so that I know exactly what was done, who you talked to, and how long each task took.  I hate getting statements that have 30 descriptions on one line item for a total of 7 hours billed.  How the hell am I supposed to know what type of value I'm getting with that jumbled mess?
  6. Communicate.  I know that things in the legal system don't resolve themselves overnight.  This is just as true of patent applications as it is of litigation.  But I also know there are a hundred little movements that show progress along the way and give some indication of how things are going.  I don't need you to tell me what the judge had for lunch, but do give me a fairly consistent update on the state of things.  If there hasn't been an update in two or three weeks but you're expecting one next month - tell me that.  It takes less than a tenth of an hour to draft that line in an email or call and leave a voicemail.  And it gives me something to tell my management team that is constantly fretting about it.  It also helps me have a realistic view of what type of invoice I should be expecting at the end of the month.  So if I have to ask for updates more than once you won't be getting my business twice.
  7. Budget with me - then stick too.  Generally if I'm hiring you it's because I don't have the skill, expertise and/or time to handle the matter directly.  So I need you to be honest and objective with me when setting out the scope of the matter.  I have to set budget expectations for my company.   Give me a realistic view of what the matter is going to cost.  Then stick to your projections.  If you think you're going to vary by more than a couple of points, you need to tell me first.  Lay out the costs of the current strategy and alternatives (along with the costs of those alternatives and their likely result.)  This gives me what I need to go back to the CFO and get more money if necessary.  When my numbers are wildly off, I look bad.  If I look bad, you look bad.  Don't make us look bad.   
  8. Watch the third party costs and pass thru overhead.  When I see an invoice that has a $60 charge for a database or copying while I'm paying a couple hundred for the hour of work that accompanied such charge I start to think that you are bad at negotiating your third party vendor contracts or your algorithm for how you allocate costs is inefficient.  When I see a pass thru cost for a $80 dinner in the office while you worked late to get that motion finished on time I again think you might be inefficient and that it must have been a very nice dinner that I'm not paying for.  When I travel I'm limited by company policy to a reasonable per diem and coach travel arrangements.  Please follow suit.  It's impossible to justify to finance why they need to approve and pay an invoice where our vendors are passing through costs that are much more lavish than those allowed our own employees.  
  9. Don't charge me for client development.  I really wish this wasn't a thing.  If you are sending me updates on your area of law, you are showing me that you stay current and are an expert.  If you are alerting me to some movement that one of my competitors is taking that may be adverse to me you are fishing for business.  When you come into town and ask me to have lunch/dinner with you, you are establishing or strengthening a relationship that you hope will lead to more business either directly or by referral.  I understand this is how your business is done and I put up with the incessant updates and invitations and try to play nice in return.  However, do not charge me for that favor.  If I see even one tenth of an hour charged to "updating client" or worse, researching the current state of affairs on my behalf without my asking you to first,  I will blow my top.  You will be fired and every other in house attorney I know will hear about how incompetently you manage your relationships.  
  10. Don't go around me.  I know you're trying to get the business.  But going to my boss or one of my business partners directly trying to sell how you're an expert in x area is not doing either one of us any favors.  I have a strategy for how I assign work to my firms.  When I'm having to spend time justifying my strategy or explaining to the CFO that although you've got a great golf game there's someone else who is better fitted to this particular matter, I'm not going to be happy.  And that means you won't get any more work from me.  Because no matter what you do or say with by business partners, legal spend is my responsibility.  And they already trust me, that's why they hired me.  So there won't be much of a fight when I say that we should go with a more economical/more expertise than you have for every new matter.  

So those are the sins that will get you kicked off of my firm list.  Have any more to add?