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Corporate legal departments and law firms desire stable relationships in which they can do high-level work in a manner in which the firms make a profit and the legal departments control costs. Some corporate legal departments have found that establishing effective partnering relationships with their outside law firms is the best way to achieve these goals. There has been a lot written on the benefits of partnering, but the practice is not as widespread as one would think. This article focuses on the reasons why general counsel and outside firms should work in a collaborative manner. Here are five reasons for general counsel to partner with firms: Reason No. 1: Better communication and responsiveness. Partnering relationships often require outside firms to communicate with general counsel on a consistent basis through regularly scheduled team meetings, extranets, bulletin boards, or shared Web sites. The collaborative relationship aligns the firm’s interests with those of the corporate client, thereby increasing the firm’s responsiveness to general counsel. Shared interests will motivate firms to keep an eye on issues that affect the general counsel and his or her company and to alert the GC to these issues as they arise. Reason No. 2: Better results. In collaborative relationships, outside counsel will have a better understanding of the general counsel’s needs and expectations regarding particular projects. Outside law firms also will consult and update general counsel during these projects. These factors help ensure that legal services provided by outside counsel are what the general counsel and company expect and need. The collaborative relationship provides outside legal counsel with a thorough understanding of a corporate client’s business and related issues. This understanding allows outside counsel to provide legal services specifically tailored to the company’s business needs. Reason No. 3: More predictable � and lower � costs. In collaborative relationships, especially those in which the company has selected a small number of firms to be preferred providers, a company may negotiate a lower hourly rate in exchange for increased volume of work allocated to a law firm. The general counsel can predict and monitor legal fees from outside counsel more accurately in collaborative relationships because constant communication between outside firms and the GC gives companies a mechanism for determining how much time firms spend on their projects. In some partnering relationships, general counsel may have access to real-time billing reports. Reason No. 4: Better-managed legal affairs. Maintaining collaborative relationships with a small number of preferred firms typically enables general counsel to manage their legal affairs better. Collaborative efforts foster a steady information flow between general counsel and outside attorneys that allow a general counsel to remain updated on a project’s progress. Finally, it is easier for companies to manage a smaller number of firms with which they have collaborative relationships than a large number of firms operating under the traditional model. Reason No. 5: Stability. Maintaining collaborative efforts with a few preferred firms can increase the stability of a company’s legal representation. Just as hiring new employees may result in a period of learning and reduced productivity, the same is true when hiring new law firms. By maintaining strong, open relationships with outside counsel, a general counsel can reduce or eliminate the learning period that occurs when the GC hires a new firm. General counsel also can proceed confidently in matters that may have legal ramifications because they know they have expert outside counsel available when needed. A BETTER PRODUCT Now for the five reasons law firms should partner with general counsel: Reason No. 1: Improved profitability. Most firms cringe at the thought of discounting hourly rates. Yet if a firm develops a partnering relationship with a general counsel, several factors may offset the decrease in hourly rates. Billable hours to the general counsel should increase as the GC engages the firm for a much higher percentage of his or her company’s legal work. A firm also can reduce the time and expense related to pitching to the GC for each project. Lastly, a greater volume of hours related to a GC’s company would reduce business development expenses incurred to generate the same volume of business from other new clients. Reason No. 2: Greater knowledge of the client. Collaborative relationships foster levels of communication with general counsel that is not present in traditional outside counsel relationships. Increased, constant communication with general counsel allows firms to gain greater understanding of the GC’s company and his or her legal department’s needs and allows firms to provide higher levels of service. Catch-up activities that law firms must perform before engagements, often unbillable, are all but eliminated in collaborative relationships because of the knowledge firms obtain through continuous communication with general counsel. Reason No. 3: Increased client commitment. Once a firm establishes a collaborative relationship with a general counsel, the firm will benefit from the general counsel’s increased commitment to the firm. A GC who dedicates time and resources to developing and maintaining such a relationship will first utilize the collaborating firm before seeking assistance from another firm. Additionally, the increased knowledge of the GC’s company and understanding of the GC’s expectations will allow the firm to complete projects at high levels of competency and efficiency. This level of performance increases the company’s commitment and loyalty to the firm. Reason No. 4: More-predictable volume of business. Development of a collaborative relationship with a general counsel often leads to an increased volume of business directed to the collaborating firm. Increased business allows firms to better plan for personnel needs and to concentrate business development expenditures on developing new clients. It also prevents firms from pitching every new project to companies with which they maintain collaborative relationships. Reason No. 5: Benefits from the knowledge of partner firms. General counsel seeking to partner with a small number of firms often will require partnering firms to communicate with and even work together on some projects. This communication between outside firms provides the firms with opportunities to learn from each other. As a result, this communication may expose a firm to new ways of handling issues and help develop a firm’s expertise in new areas. Partnering between a corporate law department and a law firm provides many opportunities for both parties’ success. General counsel receive better results and incur lower legal costs. Collaborative relationships also are more stable and enable a GC to manage his or her legal department’s affairs better. A firm can improve profitability from increased loyalty from their partnering GC clients. The greater knowledge that a firm obtains from general counsel and the other partnering firms in collaborative relationships enables such a firm to deliver a better product. These examples show that the reasons for collaboration between the GC and firms far outweigh the reasons not to enter into partnering relationships. Brian Barnard is a partner in the corporate section of Haynes and Boone in the firm’s Fort Worth, Texas, office. This article originally appeared in Texas Lawyer , an ALM publication.

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