Tuesday, June 7, 2016

Outside Counsel Guidelines (Threats & Risks) are Just in the Air...



The Risk Zeitgeist of the day continues to focus on OCGs and terms of business. Nancy Beauchemin from InOutsource recently published her own analysis and insight on these issues in Corporate Counsel magazine: "Hidden Compliance Threats to Outside Counsel Guidelines" --
  • "To protect businesses and ensure compliance with internal budgets, data privacy, security requirements and other legal statutes, corporate legal departments often require outside law firms to agree to stringent outside counsel guidelines. These were originally established to control legal costs and are one of the ways in-house counsel maintain control of outside firms. However, how can corporate counsel be sure that these guidelines are adhered to within a law firm environment? This article will address some of the inherent challenges."
  • "The first step a law firm needs to take to comply with outside counsel guidelines is to become aware that they exist. All too often, the attorney primarily responsible for the relationship with the corporate legal department will agree to the guidelines without first vetting the language with those individuals and departments within the firm that need to establish procedures and technology to comply with them."
  • "Establishing a policy to ensure that all outside counsel guidelines are reviewed prior to being executed will go a long way to ensuring attorneys are not putting their law firm at risk. This review should be completed by someone who understands the implications of the terms, such as the law firm’s general counsel. The responsible attorney or practice group leader who has a vested interest in either accepting a new engagement or continuing work for an existing client cannot be given the authority to review or accept outside counsel guidelines on behalf of the firm."
  • "Much of what is required involves restricting access to client information. Law firms often implement technology to confine access to matter information only to those individuals working on the matter. Often these programs are intended to work with enterprise document management systems, which are designed to provide a single, organized collaborative repository to manage client matter content. The problem is that, by default, most document management systems are open to anyone within the firm."
  • "Outside counsel guidelines often have some aspect of loyalty to the client. But a key issue is understanding who the client is. The guidelines may stipulate that the duty of loyalty extends to all subsidiaries and affiliates of the client organization. Yet, an all-encompassing view of the client could limit a law firm’s ability to accept future business."

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