Q. Our firm is on a calendar year. We are in the midst of our normal “cattle drive” to collect as many fees as possible. It is also the time during which we are finalizing our rates for next year, and I am working through whether my rate will be increased and by how much for my clients, especially my biggest one.
This is going to be tricky, as I have had a long, terrific relationship with the general counsel of that client, who is retiring this month. The new general counsel came in from the outside, so I don’t have any clue how he will be to deal with. Any specific advice as to communicating with him about rates going forward?
A. The inclusion of the word “communicating” in your question shows that you are already well on the path to successfully dealing with your dilemma. Starting a dialogue, and ultimately forming a relationship with the new general counsel, will be critical for you.
Many outside lawyers reflexively panic when a new general counsel arrives, as they fear that the newcomer may want to replace incumbent law firms with those that the new department head has worked with before. In the current era, where many general counsel are sitting on veritable hot seats, they often are reluctant to immediately expend much-needed political capital by quickly replacing outside counsel. This certainly holds true where the outside firm has performed well for the company and has deep and broad relationships that exist throughout the organization.
You thus should have an opportunity to sit down with the general counsel to discuss many things, including rates. In setting the stage for that meeting, it may be helpful to prepare a document that lays out the type of work your firm has done over the years, the contacts that exist throughout the company, and your firm’s key accomplishments for the client. You should keep all braggadocio out of the document and just stick to the facts, as going “over the top” could only turn off the new general counsel. The document could include data as to how your firm’s rates have varied, if at all, over the past few years, which may be a key predicate for raising them.
As to future practice, you should ascertain how the general counsel likes to handle billing. Assuming you can mirror his practices (regarding frequency and content), you should be in great shape. The general counsel may also be open to discussing some aspects of his budget, which should tie into what you may be able to do with your firm’s rates. If the general counsel is new to this market, he may appreciate knowing the range of rates that exist. If your firm is at the top of the heap, I trust that you can show how the results that have been achieved merit that rate. If your firm is somewhere else on the list, you may now have helped to set the stage for an increase, especially if it is coupled with a demonstration of your firm’s value to the company.
You should remember that what was second nature before, will be de novo for your relationship with the new general counsel. So, if you used to write off time, but didn’t tell the outgoing general counsel, since he was aware of that practice, you now have to let the new general counsel know that. Many outside counsel fail to appreciate that general counsel have to report to CEOs or CFOs on many matters, including how they are keeping fees in line. To the extent you can make the general counsel look good in that regard, you will be developing a friend for life.
Most general counsel have to provide monthly or quarterly reports that describe key issues that arose during that period, results that were achieved, costs that were avoided or fees (such as verdicts on behalf of the company, as a plaintiff, or licensing fees), and summaries of inside costs, including legal fees. To the extent that your bills are accompanied by that type of information, which a general counsel can quickly turn around to his superior, they should sail through the approval process. You will also be in a much better position a year from now when you are again weighing a potential rate increase.
FRANK M. D’AMORE is the founder ofAttorney Career Catalysts, www.attycareers.com, aPennsylvania-based legalrecruiting, consulting andtraining firm. He is a formerpartner in an AmLaw200 firm, general counsel inprivately held and publiclytraded companies, and vice president of business development. He can be reached at firstname.lastname@example.org.