Monday, August 8, 2016

Announcing Risk Blog "Shark Week" (aka OCGs & Terms of Business)




A long time reader sent in a link to a well-aged article, sparking the idea of a thematic focus for the week... I've observed that the annual "Shark Week" on cable, serving up spill, chills (and a bit of aquatic education) always earns high ratings. (I've never watched it. I'm more partial to the Twilight Zone Thanksgiving Day marathons of my youth... "That was a good thing you did. A real good thing." But I digress...)

The Sharks this week are OCGs. And we're starting with a look at that article, which was published nearly a decade ago by lawyer Rees W. Morrison, consultant to corporate general counsel: "Dueling Documents: Law-firm retention letters versus law department outside-counsel guidelines" --
  • "Dueling may be outlawed, but at the start of an engagement law departments and their law firms sometimes walk back 10 paces, turn and fire. In this country, law departments blast away with their outside- counsel guidelines; law firms return fire with their retention letters. Neither document will disappear, but the two sides can take a shot at improving the exchange."
  • "Law departments recognized that they need to set some of their own rules and expectations, so they began to create guide- lines for outside counsel. These guidelines covered all matters sent to external counsel, unlike law-firm retention letters which govern a single matter. Occasionally a law department has a set of guidelines specifically for litigated matters. In general, guidelines swing to the opposite side from law-firm retention letters: The buyer asserts its dominance."
  • "No metrics have come to my attention about the frequency with which law firms send engagement letters; my estimate, having consulted to law departments for 20 years, is that more than three-quarters of all U.S. law departments with more than 10 attorneys have by now promulgated some form of outside-counsel guidelines."
  • "The two documents clash in almost every important respect because they seek opposite ends. The partner wants freedom of action, financial protection, and little accountability. The general counsel wants control, cost consciousness, and disciplined representation."
  • "The efficacy of guidelines in terms of controlling outside counsel costs, however, has yet to be measured, let alone proven. Guidelines serve the purpose of putting law firms on notice that costs and performance matter, but in the end I am dubious that all the time and energy expended on them have made much difference. The problems of warring documents, confusing variations everywhere, and dissimilar enforcement could be ameliorated."
  • "What we need as an industry is something akin to the common application for college. We need a set of baseline guidelines for outside counsel that law departments can start from uniformly and incorporate by reference... The benefit for law firms from a common set of terms is that they too could spend less time on this aspect of representation, accept industry standards, and only discuss the few provisions that seem inappropriate."

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