General counsel should look for four important qualities in their outside counsel: The first is being an outstanding and ethical lawyer. The second is exhibiting responsiveness. The third is offering a practical and cost-effective approach. The fourth is being a tireless advocate for your client.
As to what defines an “outstanding” lawyer, general counsel should insist that their external legal team be:
- Knowledgeable and up-to-date on the latest developments in the law
- In possession of sound and reasoned judgment to help guide the organization through the litigation process
- Able to place a litigation matter in the proper perspective, meaning being able to sift through issues, assigning levels of urgency so as to plan, prioritize and execute the most advantageous and efficient approach
An additional, paramount quality is that outside counsel truly understand a client’s short-, medium- and long-term business plans as well as its day-to-day business practices and culture. Cost-efficiency is being able to help a client go from “Point A” to “Point B” via a pragmatic, efficient strategy.
It is not enough for outside counsel to be purely high-wattage intellects; they also need to be superior tacticians, outstanding communicators and budget watchdogs. External legal teams need to serve as a seamless extension of a company’s in-house counsel capacities.
How has technology changed litigation? In particular, how does the e-discovery process impact collaboration between general counsel and a company’s external legal team?
Technology has exponentially changed litigation, making discovery much more extensive and expensive and thus more difficult to litigate a case. Real pressure is felt by small-to-midsize businesses. Oftentimes, there is a question as to whether a company has the ability to adequately fund litigation in light of e-discovery challenges. Pressure is also felt by large companies who must hold and cull data from a variety of sources in temping to day-to-day business processes. The technical nature of e-discovery, coupled with the need to retain outside service providers, makes litigation far more complex.
Where is the “walk away” point, when litigation is projected to be too expensive and too resource-intensive? When should GCs settle, knowing that losing one battle is better than fighting a war?
The “walk away” point exists and is best identified when outside counsel work in a collaborative manner with general counsel. A company’s business interests and longevity, at all times, must remain paramount. The role of outside counsel is to provide options. Taking a case through trial is one option, and outside counsel and their firms should pride themselves on their ability to try cases. However, situations can occur throughout the course of an engagement when the most logical solution is to settle a matter, due to factors including projected cost and impact to a company’s ongoing business operations. Outside counsel’s charge is to provide a detailed analysis of each situation, with recommendations at certain “windows” in a case with final determination of strategy ultimately left to inside counsel and the client.
A good litigator always takes the time to understand and scrutinize a matter from all angles, looking to determine early in the process if a dispute can be resolved favorably without costly litigation. Settling cases under appropriate circumstances does make sense. Ultimately, a review needs to be made as to the potential economic consequences of going to trial. Outside counsel should always be mindful of the potential economic hardship of defending a claim. Having said this, certain claims just need to be defended and tried.
The “walk away” point is really a subjective matter that varies from case to case. At times, a company’s choice to pursue litigation is about more than cost. It is about defending its business practices, an issue that can trump strict economics. Of course, a risk in any litigation is when a company’s leadership and outside counsel both become emotionally enmeshed in an issue. The role of outside counsel is to always be as measured and reasonable as possible, truly looking at a matter with an open mind, determining what the best course of action is — early resolution, resolution or going to trial.
How have companies increasingly structured external legal teams to include litigators at an early stage in matters involving mergers and acquisitions?
General counsel need to consider all the dimensions of a potential deal. This is why a multi-disciplinary legal team, including a litigation component, is critical. While in the short-term, costs may be higher than if deal terms and evaluation are done solely by transactional attorneys, ultimately the benefit of avoiding potential issues in the long-term outweighs this modest financial expense.
For instance, from a labor and employment perspective, a deal can contain numerous potential red flags. These include issues with meshing two employment policies harmoniously, devising a proper strategy for possible layoffs and planning for potential fallout, and not fully understanding pending or emerging employment concerns that are potentially very real liabilities at play. The deal terms need to be scrutinized intensely. The goal for general counsel and outside counsel is avoiding major litigation down the road. An ounce of prevention truly can make all the difference. Similarly, in a merger or acquisition situation, there are a host of other legal issues that would benefit from a litigator’s scrutiny.
It is absolutely true that litigators do see the world and transactional matters differently than their colleagues who focus more narrowly on specific aspects of the law. This is one of the main reasons why law firms stress cross-disciplinary, holistic approaches for clients. The perception of a litigator as the surgeon called in for serious, exigent needs only is fading. While good litigators are precise, efficient and effective operators, they are also concerned with their clients on a day-to-day basis.
General counsel should view outside counsel as a complementary asset and true team members of an organization.