Biglaw, In-House Counsel, Litigators

Inside Straight: The Sins of Outside Counsel — Creating Surprises

Ed. note: This is the latest installment of Inside Straight, Above the Law’s new column for in-house counsel, written by Mark Herrmann.

“No surprises.”

When you interview for an in-house job as head of litigation, that’s what everyone — CEO, CFO, General Counsel — is likely to say: “All we want is to know in advance what’s happening. Don’t hit us with last minute litigation surprises.”

That characterization is only half true. Half the job is what you would actually expect, and why someone would actually pay money for a person to do this gig: Half the job is to minimize liability. That task, at least, requires a law degree and a little bit of skill.

But, remarkably, the other half of the job — avoiding surprises — is the aspect that seemingly draws the ire of the folks who run the joint. And that task is one that the kid down the block ought to be able to do with about fifteen minutes of training: How hard can it be to avoid surprises?

Piece of cake, right? Just track developments in all of the pending cases, estimate settlement values or likely verdicts, and flood the C-suites with information. Put together a calendar of every major event in every major case over the coming six months. Winning cases can occasionally be hard, but just tracking them? Nothing to it.

Remarkably, that isn’t true. There are five main reasons why it’s hard merely to track cases (and their values) and thus to avoid surprises, and outside counsel are responsible for three of the five….

Don't make in-house counsel look like this.

Let’s start with the two reasons that are beyond outside counsel’s control. The first reason why it’s tough to track all major litigation events over the coming, say, six months or a year is because some court systems simply won’t cooperate. If we get a call from counsel in Mexico telling us that a case was just set for a trial starting three weeks from today, that may be the fault (if “fault” is the right word) of the judicial system, rather than counsel. In some countries, cases are set for trial on remarkably short notice, so it’s not possible to keep an accurate timeline projecting when all cases are moving to judgment. Judgments, of course, can contain surprises.

The second reason why it can be tough to track all major litigation events has to do with a corporation’s own internal failings. (Needless to say, we have no failings at the joint where I work. I’m just speculating about things that might occur at other, imperfect institutions.) You might get an e-mail that says, for example, “We lost $750,000 in a trial in Sweden yesterday. No one in the business unit ever told anyone in the legal department that we’d been sued.” That’s a surprise, of course, but the solution lies in improving internal controls and processes. You probably can’t blame outside counsel for that one.

But what can we blame outside counsel for? How do outside counsel subvert my ability to do half my job? Let me count the ways:

First, outside counsel ask for settlement authority on extremely short notice. If we’re set for a mediation (or will otherwise need settlement authority by a specific date), please plan ahead. You can’t send us an e-mail on Monday saying that you could use a couple of million bucks for a mediation on Wednesday. It’s a whole lot better if you tell us in August that we’re set for a mediation in the fourth quarter, and you’ll likely need $2 million in authority a few months out. In September, send a memo analyzing the value of the case and recommending a settlement value. Give us ample time to think about your case (and the many other cases that we’re handling simultaneously) at a decent pace, and to track down everyone (up to and including the CEO, in certain instances) whose approval will be needed to authorize a payment. Let us alert our financial folks (who are planning cash flow) to anticipate the expense. Avoid surprises.

Second, outside counsel change their estimated values of cases for no reason. Outside counsel report on Monday that a case should settle for $1 million. And then they tell us on Wednesday that the case will in fact cost $4 million. And there’s no reason for the change.

We can understand that the value of a case will change if we unearth the e-mail from Hell, or if the state supreme court hands down an opinion that turns our world upside down. But the value of a case can’t multiply simply because outside counsel decided to think a little harder about it or got more nervous because we’re now actually approaching trial.

All of our in-house lawyers are responsible for many cases. Our in-house folks simply can’t know the facts of any one case as well as the outside lawyer who’s living the case from day to day. If we ask for your estimate of the value of the case, we’re relying on you. (We’re not relying on you unthinkingly; we do what we can to confirm your ideas. But you have the luxury of time, which we often do not.) Tell us the value of the case, and we’ll plan for it. But you can’t change the value of the case on short notice for no reason at all. That’s a surprise, and it’s our job to avoid surprises.

Third, outside counsel blow through their litigation budgets. If we ask for an estimate of defense costs, then give a reasonably accurate estimate of defense costs. (We know that litigation is unpredictable, blah, blah, blah. Some of us spent decades in private practice defending lawsuits and preparing litigation budgets. We feel your pain. Really, we do.) It’s possible to provide an estimate of defense costs in a case, and we should be able to rely on what you say. If the estimate proves wrong — and that sometimes happens — then tell us immediately. Immediate notice alerts us that we’ll have to adjust, but it probably doesn’t force us to change our budget by a huge amount tomorrow. We can handle evolution; we just don’t like surprises.

Avoid surprises.

That’s much, much harder than it seems. Help us out, and you’ll have our gratitude — and, over time, an increasing share of our business.

Earlier: Prior installments of Inside Straight

Mark Herrmann is the Vice President and Chief Counsel – Litigation at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law.

You can reach him by email at

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