~ Archive for November 19, 2005 ~

Chief Legal Officers Speak

1

1. “I hire lawyers not firms…”
2. “Firms who churn their associates are very frustrating to us…”
3. “Word of mouth” is most reliable referral source…
4. “Cold calling” and “sending brochures” doesn’t work
5. “Cross marketing from a trusted partner can work…”
6. “Rates aren’t as important as efficiency”
7. “No surprises!”
8. ” Focus on what I need to succeed”
9. “Buy me lunch”
10. “Don’t talk to my boss”

These are the top 10 sound bites (according to me) from CLOs Speak: Obtaining and Creating the Ideal Client Relationship,
the Legal Marketing Association – New England Chapter’s pre-conference
event co-sponsored by the Association of Corporate Counsel, November 17
in Boston. The panel, moderated by Susan Hackett, the ACC’s senior vp
and general counsel, included Barry Nagler (Hasbro), Kellye L. Walker
(BJ’s Wholesale Club), and Gant Redmon (Arbor Networks) representing
the array of in-house law departments from small to large. As moderator
Hackett pointed out, the in-house legal department is subject to myth —
they are not all huge megalithic internal law firms, they are often
one-person shops.

From those attendees I talked to this was the standout event of the
conference. If you missed it, here are my notes. PLEASE NOTE: This is not a word-for-word transcript… but an accurate portrayal of the discussion,
occasionally paraphrased and shortened/truncated…

Meet the panelists

Nagler (Hasbro): We use outside counsel as a cost minimization
strategy… we have a large in-house department. Three criteria to keep
work in-house: 1) is it core to strategic success of Hasbro? 2) is it
an area of law where we have substantial repeat business?… one-offs
go out. 3) what’s fun? We keep the entertainment law and send out the
ERISA.

Walker (BJs): We have a small in-house department — 5 lawyers. We
handle all routine work, contracts with vendors in house. We farm out
large litigation, anything novel, anything highly regulated, high
volume, and anything very complex (real estate).

Redmon (Arbor Networks): If it has to do with revenue, I handle it. I
keep transactional stuff. I farm out trademark, patents, and HR.

On the topic of convergence

Nagler: Litigation is not an area where we narrow down the number of
firms. Engagement of a new law firm is a time intensive process. We are
looking for cost opportunities. Working with a firm on a repeat bases
creates open-mindedness toward alternative billing arrangements once we
are known entities. The more your lawyers understand you, the better
they can add value.

Redmon: I’m not trying to get down to a single firm. I hire
individuals. I actually have two firms serving me for patents, I use
one for corporate, two for patents, one for trademarks, one for HR and
one for Internet, for a total of 6 outside firms.

Walker: We use 35 to 40 firms. Many are for real estate. We’re more
anti-convergence. I inherited entrenched firms but then find
opportunities for new matters to try new firms based on relationships.

Moderator Hackett put the panel into a national perspective by offering
some statistics on convergence from the ACC Serengeti Survey:

Number of law firms used by a medium in-house law department
2003 = 25 firms
2004 = 10 firms
2005 = 8 firms

Smaller in-house dept. = 5 firms
Medium in-house dept. = 10 firms
Large in-house dept. = 15 firms
XXX-large dept. = 100s

On how firms make the list

Walker: I hire lawyers not firms… what I’m looking for in a firm is
how the relationship partner leverages their pool of talent, and what’s
coming along in the pipeline. I don’t always want to see the senior
partner. I want to see how they take care of their people, and I want a
team approach where anyone can answer my question. Of course diversity
is very important to me for obvious reasons. I want to see that they
are providing opportunity, developing the pipeline. And I want to see
diversity not just on the RFP, but who is billing on my job.

Nagler: Absolutely, it’s all about the lawyer. Law firms who churn
their associates are very frustrating to us — we train them and get
the to a comfortable level where they are working at a good quality and value level, and
then they are gone. Is a marquee firm brand insurance for the board?
The board has .01% visibility on what goes on in the legal department.
They are more interested in the budget. Bet the store litigation, maybe
then name brand counts.

Redmon: New hires come from a general counsel group and an e-mail
list I belong to. It’s word of mouth. Buy us lunch, not downtown but on
128. Speak to our in-house general counsel group. Do a ‘try and buy” –
I asked someone do it for me for free and I might hire you.

Walker: We hire on “word of mouth,” former colleagues and personal
relationships. We’ll also ask lawyers that don’t handle a specific area
of work to see how they can help us… it’s a way to test and build
trust. Cold calling is out… so is sending brochures.

Cross marketing from a trusted current attorney?

Nagler: It works one out of every 15 times. The other panelists said they depend on it.

How does that panel compare to the national numbers? ACC’s survey results on
what criteria in-house counsel uses to select outside counsel:

1. Lawyer expertise
2. Lawyer reputation
3. Past relationships/successes
4. Firm’s noted expertise
5. Firm’s reputation

Then what about cost?

Nagler: Rates aren’t as important as efficiency. You assume the quality
piece… so if there are 40 qualified candidates, I can choose the most
cost effective. We are billed hourly, but looking at getting discounts
and ways to share risk and reward. The most important thing — no
surprises! Need to put yourself in your client’s shoes. If you see
costs going up, say something.. get proactive. It’s very important. We
all know stuff happens, but ‘pick up the phone.’

Redmon: If I get a big bill, I tell them I can pay this, but it will be
the last one I can pay… I asked them what did they think was fair… we
worked it out… I prefer it when you call me and tell me how many
hours you ate.

Walker: I try to set expectations and manage the relationship. We are billed hourly.

Newsletters?

Redmon: I love ‘em! I read them. Sometimes I read them and say, “Oh,
crap!” is this something I should pay attention to. I read both kinds
(e-mail and paper)… I read newsletters from 4 firms just on HR.

Walker: I get 1 and a half a day. The subject line is the most
important thing. If there is a reason for me to read it, I will open
it. Rather than mass mailings, a personal e-mail to a specific client
with a note — “Kellye, look at #2″ — that has worked.

Nagler: I also get 1 to 2 a day. I am appreciative… I get 8
newsletters just on patents. However, if you’re going to do it be
contemporaneous and topical… you have to be out front and on top of
the issues…

Diversity

Nagler: The only brochures I read are from minority-owned or
woman-owned firms as we are looking to hire — not fire– based on
diversity.

Kellye: I want to see a true commitment to diversity and the pipeline.
In a convergence situation, yes, diversity would play a role in which
firms I keep and which firms I fire.

Closing comments

Nagler: Firms should focus on “what does general counsel need to
succeed?’ Having in-house practitioners in your firm definitely helps.

Walker: Marketing needs to be customized. Also, don’t say what you aren’t. Don’t promise what you can’t deliver.

Redmon: Blackberry, good. If your client hires a new GC, get on a plane
that day and take them out to dinner that night. Help me get a job.
Make me look good. And, don’t talk to my boss.

See related post: What Drives Corporate Counsel in Their Relationship with Outside Counsel.

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