Egad! The General Counsel just announced that your target for next year will be to handle 20 percent of all outside legal spend on an alternative fee basis! What do you do?
You can’t just do flat fee agreements! What happens if you agree to pay too much, and you’ve given away your client’s money? And success-based fees are a great idea, but they’re impossible to calculate! How does anyone know at the start of a piece of (non-routine) litigation what the case is worth? Since you don’t know the value of the matter, you can’t set the target from which you’ll judge success.
What’s an in-house lawyer to do?
Calm down. Here’s a way to ease into alternative fee agreements that will put neither you nor your outside firms at risk, will educate you slowly over time, and will meet your internal objectives….
It’s not just the federal government that’s desperate for money. The states are, too.
One way that states are looking to fill their coffers is by auditing unclaimed property on companies’ books — so-called “escheat audits.” This isn’t the world’s sexiest topic, but an in-house lawyer might serve a valuable purpose by double-checking corporate escheat policies.
In the financial services industry, many companies must deal with unclaimed deposits and securities. But even outside that sector, most companies find themselves holding unclaimed property, in the form of uncashed vendor or payroll checks, undistributed benefits payments, or the like. Complying with escheat laws may pose a challenge.
States are now doing two things related to escheat laws to increase their revenue. First, they’re shortening the amount of time that a holder can retain unclaimed funds before turning those funds over to the state. Second, states are accelerating their use of “escheat audits” — auditing corporate books to see whether companies have complied with the applicable laws.
This has recently become big business — with implications for in-house counsel….
Several readers have sent e-mails asking for advice on how to deliver bad news to clients.
Here’s proof that, if ye shall ask, ye may receive.
Think first about the “bad news” that you’re delivering. You’re not a physician, so you’re not looking a person in the eye and explaining that he or she has just six months to live. That’s really bad news, and that’s hard to deliver. Your job is easy.
Even in the universe of bad news delivered by lawyers, if you’re working with a corporate client, you’re probably getting off easy. You’re not reporting to the client that “the Supreme Court just rejected the application for a stay of your execution” or “the appellate court just affirmed the conviction, so you’ll be doing the time.” The bad news that civil litigators are delivering to corporate clients just isn’t that significant. So calm down.
I’m also ruling out other bad news that folks deliver to, or receive from, in-house counsel. I’m not thinking about telling employees that they’ve been laid off or fired or delivering unhappy performance reviews. I’m not thinking about how you deliver bad news to your own law firm or to a court. And I’m ruling out situations where the bad news results from your own error, rather than an adverse decision by a court. (It’s much harder to tell a client, for example, “I blew the statute of limitations, and your claim is now time-barred,” than it is to tell a client, say, “The court denied our motion for summary judgment.”) So maybe I’m cheating here, by limiting the discussion, but the optimal way to deliver bad news will vary with the situation.
So what’s the best way to deliver news of an adverse judicial decision to a corporate client?
A lawyer who lacks self-confidence feels compelled to run down every issue, make every argument, and depose every witness. After all, if you choose to make an educated guess about the importance of a tangential issue, or whether to omit a plausible (but likely losing) argument from a brief, or whether to incur the cost of deposing a just-barely-relevant witness, all may be lost. You might lose the case, and the recriminations would never stop. Better to leave no stone unturned than to leave yourself at risk of being second-guessed.
That’s one reason to hire lawyers with a little self-confidence. They’re willing to take intelligent risks where it makes sense to do so.
Which brings us to the topic of today’s post: Compliance due diligence.
If your company’s considering an acquisition, you can simply outsource the entire compliance due diligence process. Hire Big Firm, ask it to handle due diligence, and wait for the results. No muss, no fuss.
It’s tough to “lateral up” at a big law firm. Since I just invented the phrase “lateraling up,” I suppose I should define it: It’s when a fairly senior lawyer asks an older lawyer to help on a project.
If you’re 40 years old and just landed a small- or medium-sized matter, it’s hard to add a 55-year-old partner to your team. It might make sense to add the senior partner for the sake of either the client (the older partner has special expertise) or the firm (the older partner is competent to do the job and has time available to help), but it’s nonetheless tricky to execute.
In the litigation environment, if the client is looking to the 40-year-old to supervise the case, the 55-year-old can’t find a role that makes sense. The older partner can’t take the lead, because that’s the younger lawyer’s task, and the older lawyer can’t not take the lead, because senior people somehow don’t do that at law firms.
The same is true of corporate matters. The older partner can’t do the deal, because the client asked the junior lawyer to do it. And the older partner can’t carry the bags (to use the milder form of what the corporate lawyers really say) for a junior partner on the deal.
Please note the limitations on what I just wrote….
I never noticed this before I went in-house, because it never made a difference to me: When you’re an outside litigator, representing corporations in significant disputes, your clients are lawyers.
This may not be true for all outside lawyers. If you’re representing a small business, the business may not have inside counsel, so you may report to the business people. If you’re a transactional lawyer, perhaps your clients are more often business folks. But, as an outside litigator representing big companies, your client contacts are generally lawyers.
This matters. The client contacts have been through four years of college and three years of law school. That may not mean much, but it means something. Tautologically, it means that they’ve had lots of years of formal education. (“If I’m still dumb now, it’s my fault.”) Practically, it means that your client contacts have learned how lawyers think and, to some extent, the words that lawyers use. (When I was outside counsel, not all of my clients knew what an “MDL” was. If the client had the misfortune to be dragged into one of those puppies, I might have spent a little time explaining. But basically all of my client contacts knew what the words “complaint,” or “discovery,” or “summary judgment” meant. We shared a common vocabulary.) And lawyers as a group probably care more about legal issues than non-lawyers do.
To be sure, outside litigators often work with non-lawyers. We’ve all had to prepare for depositions senior executives who were way too self-assured, or people whose view of the facts wasn’t exactly confirmed by the documents, or witnesses who required a lot of time and effort because they were slightly slow on the uptake. But, as outside counsel litigating cases for big companies, it was typically the in-house lawyers who ultimately supervised and evaluated our work.
Once you move in-house, that is no longer true. We’re the lawyers; our clients are not….
At every conference, and in many articles, people pose the question: “As a client, do you hire law firms, or do you hire lawyers?” The clients dutifully respond that they hire lawyers, not firms. Hasn’t this become sufficiently obvious that we can stop asking the question?
Why does any rational client hire lawyers and not law firms?
Because law firms are an aggregation of lawyers. Once a firm grows beyond a relatively small size, the quality of lawyers will vary. As a client, what matters is the quality of the lawyer working on your matter, not the quality of people not working on your matter, or the identity of the firm. (An exception may exist when a timid client is protecting itself against the possibility of a bad result: “We hired the biggest, baddest law firm available to handle this matter for us. Now that things have gone poorly, you can’t blame me, because I hired the best and sunk a lot of money into the matter.” But that reasoning is foolishness, and I hope this doesn’t happen often.)
The truth is that law firms themselves are uncertain about the quality of their own lawyers. Why?
And they should be. At a firm, if you could convince half of your lawyers to write intelligent, substantive blog posts twice a week in their areas of expertise, you could stop paying the public relations folks. You’d dominate the web, and reporters from traditional media would beat a path to your url, seeking ideas for stories and comments on hot topics.
(The same holds for many corporations, although it would be the business folks (who are responsible for generating business) and not the in-house lawyers (who are not) who should be hitting the keyboards.)
But firms and corporations don’t do this, for many reasons. First, firms are skeptical; they’re not sure this would work. Second, this requires a large, non-billable commitment of time; many firms (or individual lawyers) aren’t willing to put in the effort. Third, firms are legitimately nervous. What happens when we urge our lawyers or employees to go forth unto the web, and those folks go forth and write embarrassing or crazy stuff, which they inevitably will?
In fact, even if you don’t encourage folks to participate in online discussions, they’ll do it anyway. So social media policies have necessarily become the next rage: How do law firms and corporations protect their institutional interests without unduly interfering with their employees’ right to express themselves online?
Law firms, and in-house law departments, should be outer-directed.
I realize that I just invented the word “outer-directed,” and sensible people might choose to call this concept being “client-focused.” But “outer-directedness” is broader than mere client focus — and I invented the word, so it’ll mean what I want it to mean.
At a firm, lawyers should naturally be client-focused, in the sense that client work comes first and most internal matters come second. “Outer-directedness” implies not just client focus, but a more general external focus — devoting efforts to impressing the world, rather than to impressing others within the firm.
We should naturally spend our professional time serving our clients. And, in a law firm setting, we should spend our semi-professional time gazing out through our office windows, not peering inwardly down our own corridors. If a case just settled and you have some free time, spend that time impressing the world, not your colleagues. Join a non-profit board, work for a bar or trade association, write an article, give a talk. Raise both your personal and your firm’s profile. That benefits the world and serves institutional purposes. Don’t spend your spare time impressing your colleagues.
We should of course be nice to each other, but that’s civility, not having an undue inner focus. I’m opposed only to the stuff that goes beyond civility, which I’ll delicately call “office politics”….
The Harvard Law School career services office recently asked me to record a podcast on the subject of “managing up.” This got me to thinking: What the heck is “managing up”?
Fortunately, the woman from career services explained. She was interested in discussing how, as a junior lawyer, you manage the senior lawyer who’s supervising your work.
That’s not anything I’d thought about before, but (as readers of this column well know) that hasn’t stopped me yet, so I said I’d be happy to help with the podcast. Now I’m thinking about what I might actually say.
I’ve tentatively decided that the key to managing up is exactly the same as the key to managing down. In fact, it’s the key to basically every interpersonal relationship you’ll ever have: “Do unto others as you would have them do unto you.”
Think about it: How should you manage down? Do unto others as you would have them do unto you. Do not have me, the father of two young kids at the time, fly to Cincinnati for what should be a five-minute meeting set for 11 a.m. on October 31, and then postpone the meeting for an hour, and then postpone it for another couple of hours, and then postpone it again, and then, after everyone else has headed home or to the airport to take their kids trick-or-treating that night, finally tell me at 6:30 that we’ll have to reschedule our meeting. If that ever happened, I might still remember the incident, with lingering resentment, eighteen years later….
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We currently have a number of active openings for associate roles at US and UK firms in HK / China, Singapore and two new in-house openings. As always, please feel free to reach out to us at asia@kinneyrecruiting.com in order to get details of current openings in Asia, as well as to discuss the Asia markets in general and what we expect for openings later this year. Our Evan Jowers and Robert Kinney will be in Beijing the week of March 25 and Evan Jowers will be in Hong Kong the week of April 1, if you would like to meet them in person.
The US associate openings we have in law firms are in the usual areas of M&A, cap markets, FCPA / white collar litigation, finance, and project finance. The most urgent of our top tier (top 15 US or magic circle) law firm openings in Asia (among many other firm openings that we have in Asia) are as follows:
• 2nd to 5th year mandarin fluent M&A associates needed in Beijing and Hong Kong at several firms;
• Korean fluent 2nd to 4th year cap markets associate needed in Hong Kong;
• 2nd to 5th year Japanese fluent M&A associates needed in Tokyo;
• 4th to 6th year mandarin fluent cap markets associate needed in Hong Kong;
• 2nd to 4th year M&A / cap markets mix associate needed in Singapore.
The last time I flapped my wings your way, I tried to make at least enough noise about your mobile phone to make you more than a little bit uncomfortable. I hope I did. If enough of us become anxious enough about the known and unknown unknowns and knowns in our mobile phones, then we can start making wise decisions about how to manage that information and its resultant investigations.
Today, I’d like to put a finer point on the last installment’s topic by asking a question that seemed to catch most attendees off-guard at a conference panel that I moderated last week: is there discoverable personal information in a mobile app? Our panelists’ answer was a uniform “yes” with one stating that, if he had to choose only one type of data that he could discover from a mobile phone, he’d choose app data. Why? Because there’s simply so much of it and because almost all of it is objective – not just user-created like an email – but machine-tracked like GPS, usage duration, log in and log out times, browsed web addresses, browsed actual addresses. Also, most of us seem to have the idea that data doesn’t actually “stick” to our mobile devices the way it “sticks” to our hard drives. Maybe there’s a disconnect based on the fact that our phones are mobile so we assume the data is mobile to?
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Egad! The General Counsel just announced that your target for next year will be to handle 20 percent of all outside legal spend on an alternative fee basis! What do you do?
Continue reading “Inside Straight: Alternative Fee Agreements For Beginners”
