I can never decide what I want to write about in this column because there are so many issues driving the desks of in-house counsel. So I decided to offer you a temperature reading on the issues that seem to be behind many general counsel’s efforts to drive the desk rather than allowing it to drive them.
The Lawyer-Auditor Relationship
OK, so you’re not affected by prosecutorial and enforcement practices that erode the attorney-client privilege when an allegation is lodged against your client because your company–knock on wood–hasn’t been subject to a government investigation.
But wait! You do have a yearly, if not daily, audit process going on, and the movement in the courts–combined with PCAOB guidance and regulation–suggests to your auditors they are crazy if they don’t ask for every document in the company’s files. That includes your privilege-protected files. These days it seems that any stone left unturned by an auditor will later be a noose tied around the auditor’s neck. So how are you going to protect your client’s privilege rights vis-? -vis your auditors? The ACC has a new resource and project addressing these concerns available at www.acc.com.
The High Cost of Advice
One of the worst days for general counsel in recent months came when the Wall Street Journal ran a major story about a number of outside counsel who charge $1,000 per hour. The article made it sound like this was rare, yet many in-house counsel for larger clients will tell you they all have $1,000-per-hour lawyers working for them somewhere, and such lawyers are worth every penny. They do in 30 minutes what a lawyer without relevant experience would take three days to finish.
Many CEOs came blowing down the hall the day that story came out, WSJ copy in hand, yelling, “We don’t have any of these $1,000-per-hour lawyers on our payroll, do we?” And of course, “we” do. The irony is that in-house counsel spent a lot of time and effort that day explaining why $1,000 per hour is reasonable when we all know the real problem is the junior associate doing pedestrian discovery work for $400 an hour. ACC pledges to spend 2008 helping members address this issue.
The ERM Conundrum
ERM is a reference to Enterprise Risk Management, which plagues the CLOs of every major entity, especially in high-risk industries. The process issues in ERM may not be entertaining, but they can be addressed with time and money. What’s harder is coming to grips with the ethical culture issue: whether your systems are complemented by commitment to ethical behavior in every aspect of the company’s work. This requires an oft-painful analysis of the company’s appetite for unfettered entrepreneurship, how to synchronize compliance efforts across 75 international jurisdictions (and their attendant and unique workplaces and worker cultures), and when/how to rein in those high producers known to sometimes operate without a charter.
The Measuring Game
Are you measuring enough? Are you measuring the right things? How do you measure whether you’re measuring well? To prove the continuing value of your in-house legal function and find better ways to improve your service to your client, you need to measure the successes and failures of your department and yourself. You also need to figure out how to measure just about every other thing out there. Not everyone can keep up with the Fortune 50 on this stuff. They’ve been engaged in such aggressive measuring (calculated by the colors of their Six Sigma belts) that it’s making the rest of us look pretty lame. It also is confusing the issue as to what is important universally and what is just not possible given scale in smaller departments. I’m fascinated by metrics applied to legal practice and the resulting discussions on lawyer professionalism and choice of service providers, but I know many think of it as a double-edged sword that can cut the measurers just as surely as it is used to cut the measured.
Susan Hackett is senior vice president and general counsel of the Association of Corporate Counsel.