In-house counsel hate surprises but love communication

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By DIANA SMITH, Staff Writer

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Building rapport and maintaining constant communication are the keys to sustaining a healthy business relationship between in-house and outside counsel, panelists said at Lawyers Weekly’s Business &Law Breakfast Feb. 16.

About 40 people gathered at the Marriott City Center hotel in downtown Raleigh as panelists Jay Campbell, executive director of the N.C. Board of Pharmacy; Ken Hammer, general counsel and vice president of corporate governance at DataFlux Corp.; and Jeff Miller, vice president, general counsel and secretary of Highwoods Properties discussed the most effective ways for outside firms to attract in-house business.

All agreed that cold calls and e-mails are not effective tools for courting corporate counsel.

“The best marketing doesn’t feel like marketing,” Hammer said.

Instead, “Word-of-mouth works very, very well,” he continued. “General counsel tend to be an insular bunch and we tend to talk amongst ourselves. It’s quite common to call up our peers and ask for a referral,” he explained.

And once hired, it’s important for outside lawyers to keep in-house counsel apprised of any changes related to their legal matters. Lack of communication is one of the first reasons why an in-house lawyer might sever ties with an outside attorney.

As an example, Miller told the audience that the only time he ever fired an outside firm was when the lead lawyer handling his case left, but the firm didn’t inform him of the separation.

“That didn’t go over well on my part,” he said. “Outside lawyers need to understand that in-house lawyers and business people hate surprises.”

That goes for fee arrangements as well.

General counsel are willing to pay more by the hour for specialized legal expertise, but they scrutinize the bills closely when they’re for “commodity-driven” matters that can be handled by any number of firms, Miller said.

And while the billable hour remains the norm, other fee structures are beginning to emerge. The N.C. Board of Pharmacy pays its primary outside firm a set monthly amount to handle “commodity” work, Campbell noted.

“Coming from an agency, our primary needs for outside counsel are for quasi-prosecutors and case handlers for disciplinary matters,” he said. “They vary in content to some degree, but the process and the amount of time required is pretty predictable and doesn’t require much specialized knowledge. We were able to reach a flat fee to cover those commodity services.”

That said, “there are provisions within that agreement to allow hourly billing at an agreed-upon rate” for unusual circumstances,” Campbell added.

But again, when an anomaly occurs, the most important thing to do is to let in-house counsel know immediately, the panelists emphasized.

“We all serve someone,” Hammer said. “There are two variables – the amount of money you pay and the result. We have to manage those expectations. As long as the people we serve know approximately what something will cost, and as that number gets adjusted we give them enough warning and explain the return on that investment, we’ll be fine.

“We all get in trouble – outside counsel and general counsel together – when we deliver an unexpected result, or even deliver the right result with a budget that’s well beyond what we set,” he said.