Tuesday, May 31, 2016

Inside Outside Counsel Guidelines (or “On Outside Counsel Guideline Guidelines”)



The founder of the legal consultancy Procertas, formerly in-house with Kia Motors, Casey Flaherty work with both law departments and law firms on process and technology projects that improve collaboration and service. He writes plainly and compellingly: “Outside Counsel Guidelines and Collective Conversations
  • “I hate outside counsel guidelines. Hate. It's visceral. I have never encountered a set of guidelines I liked. My antipathy includes guidelines I had a hand in writing...As an associate I worked for a client whose guidelines forbade time entries that suggested any form of communication between lawyers--meetings, conversations, conferences, correspondence. So, too, any form of research and many other essential elements of producing work that were impossible to avoid within the delivery framework within which we were operating.”
  • “While guidelines saved the client no money, they did waste considerable time. Because the client had an extensive external review process, the firm had an intensive internal review process to make sure the billing language satisfied the client's guidelines. Internally, entries were constantly being sent back for rewrite but not writedown.”
  • “For all the effort that both put sides into satisfying and enforcing the guidelines, they would have been much better served to engage in a structured dialogue about continuously improving project management (communication) and knowledge management (research), as well as other aspects of service delivery such as templates, automation, analytics, and staffing. With respect to staffing, the client should have been interested in maintaining a stable team that was familiar with their work. Which, of course, means that I just suggested a new guideline as part of a screed against guidelines. I'm a bit of a hypocrite.”
  • “And, yet, there's a problem: we don't really have a forum to debate particular policies and prohibitions. Outside counsel guidelines are presented as a fait accompli. Pushing back on them in the context of the relationship is hard. Simon Chester, the former GC of the former Heinan Blake [now at Gowling WLG], has detailed many of the problems in billing guidelines and believes that firms "have to be prepared to walk away" from the engagement. But how many firms can afford to walk away in a world of flattening demand, lateral hypermobility, and inherently fragile firm structures?”
  • Compounding the problem is that firms often provide, and clients frequently sign, engagement letters that contradict the guidelines. These, too, often go unread. In not being read, guidelines and engagement letters are like 99.9% of the executed contracts in existence. As litigators know well, most people only read the contract when something goes wrong, which, frankly, is not too often in percentage terms but is common enough in raw numbers to keep us employed.”
  • “Ironically, the law department/firm relationship is among the worst papered commercial relationships a corporation will enter into because their lawyers are otherwise so vigilant when it comes to the business units' commitments and obligations. Most of the time it's fine. Except when it isn't. And then it is bad. I didn't realize how bad until I had a recent chat with someone who audits legal bills for a living. We're talking five to seven figures and immense stress on relationships. He explained to me that violations of the billing guidelines were, by far, the lowest hanging fruit. Both law departments and law firms have a contract management problem.”
Casey goes on to admit not having a solution, but does outline a proposed path to one. The entire article is worth a read. (And perhaps a sigh, or cry.)

(And any guess what tomorrow’s post will be about?)

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