Over the past few years I have had countless conversations with lawyers, both in-house and in private practice. When analyzing these conversations, some interesting observations emerge. The first thing that becomes apparent is how different the mindsets are. In-house lawyers have to be team players by definition. They are employed by a company and are part of a legal function, who’s task it is to support the business by managing legal risks in order to ensure business continuity. This is a team effort and always in close cooperation with other functions within the company. There is no place for strong egos or competition on an individual level. In-house is not about the individual lawyer, it is about the company.
Lawyers in private practice have in a way the opposite mindset. Lawyers act primarily as individuals and ‘compete’ with each other within the firm. The intensity of this 'competition' will vary per firm, but it will always be present to some extend.
In-house operates as a team, outside counsel operates as an individual first.
Being team players, in-house lawyers tend to be more open to alternative solutions and less contentious than their outside counterpart. Being called upon when the going gets tough, outside counsel has to provide certainty and has to step in to defend the client’s interests. Like a gladiator stepping into the arena, outside counsel is armored and carrying weapons. The mindset is to find every potential hazard and to make no mistakes. Outside counsel has to be right, in-house is allowed to not immediately have all the answers and ask questions. Again, very opposite mindsets.
Outside counsel feels the pressure to have all the answers, always.
Despite these differences, both in-house and outside counsel remain lawyers before anything else. Being lawyers makes them see things primarily from a legal perspective. Working in a business environment is very different from working as an academic, a judge, a prosecutor or a legislator. Companies do not have legal issues; they have a business to run. For the lawyers it is paramount to understand that business. To understand the framework and the purpose for what they do. This often, for both groups, is a struggle. Lawyers are not engineers, lawyers do not have a sales background or in-depth knowledge of financial or market dynamics. For a lawyer ‘understanding the business’ will always be a challenge. Obviously in-house lawyers have in this respect a clear advantage being part of the business day-in-day-out, but even then it remains a challenge to fully understand the business. For law firms we could compare with their support staff. Despite the fact that their HR, Finance, IT, Marketing and BD professionals work amidst lawyers, it does not mean that they understand the law firm’s business. Understanding the business is pretty hard if you are not part of the primary process.
Most lawyers never really understand ‘the business’.
Things being as they are described above, I see a lot of lost opportunity to add more value to the relationship. In essence there is given the length and the intensity of the relationships between in-house and outside counsel, surprisingly little dialogue. Sure, there is lots of communication, but this is almost exclusively on actual matters and the way they are handled. Anything even slightly outside the actual content of the matters is often ‘outsourced’ to the department in charge of the client feedback program. Some law firms go as far as employing a ‘Client Listening Manager’ (just google this term and you will be surprised). These initiatives focus on relationship and delivery. Lawyers still struggle to understand their clients’ business. Understanding the business can not be outsourced, it can only be done through meaningful dialogue between the lawyers and the business. Day-to-day communication and client feedback programs are no substitute for dialogue.
Lawyers, both in-house and outside can only deliver value if they understand the business. Understanding the business means understanding the economic drivers and the business model of the clients. This requires insight in the company’s strategy, product development, market developments and client dynamics. Unfortunately, this kind of insights are often hard to get. Yet, without the proper business context, lawyers can not deliver real value. ‘Client Listening’ cannot fix this. Having conversations only between in-house and outside counsel does not fix this.
In-house lawyers often appeal to their outside counsel to better understand their company's business. Law firms respond by appointing ‘client partners’ and by organizing in market or sector groups. This only half solves the problem. Client partners typically primarily look after their own business and sector groups often experience frictions as it comes to who benefits from the efforts. This leaves clients underwhelmed by their law firms’ initiatives.
Clients need to grow up and 'demand' instead of 'expect'.
Clients have an interest in taking the initiative. I would recommend clients to organize an annual ‘strategy day’ on which all panel firms are invited at the same time and where there are plenary sessions followed by breakout sessions on different lines of business within the company. Attendance should be mandatory and lawyers should not charge. Clients should demand that the panel firms send lawyers of all relevant practice groups and participate actively in discussions. If understanding the business is crucial to value, as it is, clients should no longer expect, but demand their outside counsel to acquire the knowledge. This should be made mandatory for all panel firms. Such ‘strategy days’ will equally help the in-house team to remain up to speed with the strategy and the latest development. It will also benefit the relationship between in-house and outside as both will be on the same page. It will open the door to dialogue rather than mere communication.
For those of you who are in private practice, embrace the idea and propose to your corporate clients that they organize such a ‘strategy day’. Don’t try to make it exclusive and make sure all competing panel firms are equally represented. If not, it will completely miss the purpose.
My new book ‘Data & Dialogue, a relationship redefined’ stresses the importance of dialogue between companies and law firms and vice versa. It gives hands on insights in what can be done to improve the relationship. Data & Dialogue is available through your local Amazon website, both in paperback and e-reader. Buy your copy now.