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When in-house counsel and outside counsel consider doing business, they often start out the relationship with very different perspectives, objectives, and goals. These differing perspectives can contribute to misunderstandings and dissatisfaction with the relationship as the representation progresses. But asking a few basic questions upfront can do much to head off potential problems. And once the relationship is established, both in-house and outside attorneys need to actively and regularly communicate about costs, staffing, and strategies. The differences in perspective between in-house and outside lawyers are fundamental and basic, even affecting the way the two types of attorneys view the subject of the representation. The in-house attorney who retains outside counsel usually is looking to help his company capture a business opportunity, solve a business problem, or (particularly in the case of litigation or compliance advice) reduce the company’s legal exposure. The outside counsel, by contrast, looks at the transaction as a business opportunity in its own right and often (particularly with specialists) is as intrigued with the legally interesting aspects of the matter as the effect on the client’s business. Views about workload, management, delegation, and cost containment are also often at odds. In-house attorneys frequently operate under tight budgetary constraints, and are under constant pressure to produce cost-effective results. In-house practice and corporate culture are also very different than law firm practice and culture. Many in-house counsel do not have the time or resources to fully investigate an area of the law or to develop or retain a legal specialty � they refer these matters to outside counsel. Similarly, they have little opportunity for the type of collaboration that is a critical part of law firm practice. Often, in-house counsel evaluate outside counsel as much on expense (ability to contain costs) as outcome (whether the outside attorney was able to achieve the desired result). In-house counsel can be very critical about law firm expense and management practices, given these cultural and practice differences. In some circumstances, outside counsel may not even understand the reason they were retained in the first place. The decision to hire outside counsel is often complex and depends on many factors. These factors include not only obvious ones, such as the importance of the result to the client or whether the company has in-house expertise on the issue at hand, but also more obscure considerations such as workload, staffing, and relative costs. In fact, in-house counsel sometimes hire outside counsel because they can handle a matter more cheaply and efficiently, or with less active supervision than keeping it inside. Outside counsel usually are happy to accept the business, and rarely inquire into the reasons they are being retained to handle a particular matter. It is thus not surprising that in-house attorneys and outside counsel often come to the table with very different views about key issues, such as how to handle the assigned matter and prioritize the work, how the outside counsel should bill for services, and how to add value. If in-house and outside counsel take the time to discuss their differing perspectives and create a clear understanding of how to handle a particular matter or work relationship, things can run smoothly and create greater opportunities for the outside counsel to acquire future business from the in-house attorney. Yet, too often, both parties fail to properly create this understanding, causing unnecessary disagreements and frustration. What are some workable solutions to improving and sustaining more fulfilling partnerships between in-house attorneys and outside counsel? In addition to understanding why she was retained, the outside counsel is well-served by trying to understand the in-house attorney’s perspective and objectives. It is also helpful to understand the in-house attorney’s working style, and how to best communicate. Below are a few of the most important questions an outside attorney can ask to determine how best to manage the relationship. • What is the in-house attorney’s goal in using outside counsel? This often is not as obvious as an outside counsel thinks. Of course, the in-house counsel wants the best representation possible and the results to justify the expense � completing the transaction or winning or settling litigation. But winning, again, is not always everything to the in-house lawyer. She may want to retain an outside attorney because of internal workload considerations or because she needs someone who can handle the matter without extensive supervision. • How are legal projects assigned and handled in-house? When it comes to distribution of various kinds of work, outside counsel generally are not aware of how legal work is assigned in-house. Outside counsel also sometimes think they do more of their client’s work than they actually do, and that they understand the client’s business better than they do. The more the outside counsel knows about the in-house legal department, the more she can understand what the in-house attorney expects and how he will likely view the representation. Knowledge about how the in-house legal department operates also provides valuable marketing information. The outside attorney who knows his client and how work is assigned by the in-house attorney can better target cross-selling proposals, marketing collateral (such as briefing memos), and other marketing pitches. There are intangible benefits as well. The outside counsel who can engage his in-house counterpart on workload and in-house processes has a better chance of becoming a trusted adviser to the in-house attorney, which naturally creates opportunities for more business. And it is a natural way to begin to develop rapport; most in-house counsel will discuss workload and work assignment issues, if the conversation is related to how the outside counsel was selected for a particular matter. • How much can I delegate? Even with large corporations, selection of counsel is personal. Attorneys hire attorneys, not law firms. Often, when an in-house attorney calls a particular attorney to handle a matter, it is because she believes that specific attorney will provide superior results for the matter � not that attorney’s partner or associate. This is not always the case � there are smaller matters that are assigned to outside counsel because of location, for example, or volume of similar work, or the need for specialized advice, where the attorney or attorneys handling the matter are less important than the firm. Moreover, an in-house counsel usually strongly supports delegation in order to lower fees and expenses. The key here is to reach a clear understanding with the in-house counsel about the amount of delegation, and how much the outside attorney will be personally involved in the day-to-day management of the representation. • How should I staff and manage the matter? Overstaffing is a universal and constant concern for most in-house counsel; in fact, overstaffing is the biggest pet peeve for in-house counsel. The in-house attorney’s budget for outside counsel fees is generally limited and must be spent wisely. Outside counsel should staff matters with only those resources that are needed; no in-house lawyer wants to pay for three attorneys when one would suffice. It is crucial, then, to have a frank and specific understanding upfront about staffing issues. This includes understanding how many attorneys will work on individual projects or issues. And once the understanding is reached, it is critical to work within the in-house attorney’s (reasonable) expectations on staffing, and have follow-up conversations as necessary. For example, even if you have three attorneys working on a matter, it may not be necessary to have all three participate in a client interview or strategy calls with the in-house counsel. • What are the in-house attorney’s expectations regarding cost containment? Cost containment is essential. Outside counsel often are sheltered from the fiscal demands faced by their in-house counterparts. In-house attorneys must demonstrate to their shareholders that they are receiving superior quality for the dollars spent using outside counsel. Outside counsel do often have a sense of the financial pressure that in-house attorneys face, but it is essential that they spend dollars and hours wisely. • How do we handle interactions with corporate employees, officers, and directors? Some in-house attorneys are very sensitive about contacts within their companies. This is often a matter of personal preference for the in-house attorney. Some believe that they have to be involved in every discussion with their clients, regardless of the importance of the issue to their company or the nature of the contact. Others want to give outside counsel as much freedom as possible in contacting corporate personnel to increase efficiency and lower costs. The only way to know for sure, without taking a risk of creating a problem with the in-house attorney, is to discuss this issue at the beginning of the representation. John S. di Bene is vice-president, general counsel, and secretary of SBC Long Distance.

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