While a law firm’s performance is important, it’s the personal touch that can be a deciding factor for companies choosing external counsel, writes Smita Priyadarshini

The in-house legal team-external law firm dynamic is a classic example of a symbiotic business relationship. However, it is fair to say that this relationship has been rather static, and there is a stereotype that corporate legal teams simply want the best outcome for the lowest price, while law firms want to maximize billable hours.

However, a developing trend against this stereotype focuses on building relationships across industries and shifting emphasis from self-serving gains to mutual benefits. Law firms should take note that consumerism has taken root in the legal industry, too.

A solid work product is important and legal results no doubt top the list, but for a client to return and create repeat business for a firm, they must have a positive recollection of their interactions and believe the relationship is worth the investment. Clients are seeking assurance that their law firms are listening to them and are proactive in learning about their goals and overall business.

A company appoints a law firm to its legal panel for the firm’s expertise, but also because the firm is better placed to handle a large volume of legal work. This frees up the company’s in-house legal counsel to focus on other pertinent matters. For law firms it is a matter of prestige, and undeniably income, to be appointed to the panel of a large corporation or global company.

Securing a company client ensures a steady source of income, providing a predictable revenue stream to the firm. Many corporate lawyers working in law firms can handle a company’s business transactions such as negotiation, drafting and review of contracts and other agreements associated with the activities of the business, such as M&A, divestitures and labour-related issues.

They also advise clients on corporate governance and operational issues such as the rights and responsibilities of corporate directors and officers, and other general legal activities of the company. And they can assist clients with audit and/or financial information needed by stakeholders such as the board, employees and shareholders. Many empanelled law firms handle litigation matters for their
clients, too.

THE DECIDING FACTOR

Research has revealed that when dealing with outside counsel clients look for:

  • Expertise and experience;
  • Relationship and teamwork;
  • Business understanding.

Relationships take a deeper investment on the part of external counsel to effectively build and sustain. They do not start and end at business luncheons or dinners. It is a continual process of investing time, and going that extra mile. More often than not, this becomes the deciding factor for clients to zero in on a law firm for their legal panel. Staying informed about a company’s business priorities forms perhaps a quarter of a strong client-firm relationship equation.

The other three-quarters consist of taking proactive action such as: (1) presenting regular updates to the client’s law department about the latest happenings and trends in the industry; (2) getting regular client feedback and working to address any action items identified; (3) maintaining regular contact and face-to-face interactions with the legal department head to keep the conversation going, using relevant data points for reference; and (4) highlighting potential avenues for process improvements.

Being mindful that the goal of such discussions is to improve the process is critical to building relationships. When in doubt, the best method to create sustainability and longevity in the relationship is to simply ask the clients what is important. This can pave the way to establish the shared responsibilities needed for a great partnership, or to strengthen an existing one.

External counsel need to assess at every step areas in which they have been doing well and areas where they could have done better, and also whether there was an opportunity to assist with legal work that the firm missed. More and more, clients are shopping projects one case at a time until they find a firm that can meet their needs.

SEEKING-SIMPATICO

Most law firms are mindful of this and have devised an interesting solution. They are increasingly pooling counsel from various practice areas, who have expertise in specific industries, or pulling in lawyers from other legal specialties that clients from particular industries may need.

The evolving client-counsel relationship is even changing the lives of freelance consultants. One such consultant has provided remote legal support to a leading online shopping giant for its consumer-related and litigation matters for more than four years. Face-to-face interactions were needed to cement her years of hard work into sustainable relationships, but her client did not suggest this to her in any way.

They were happy with the arrangement, but increasing competition and easy availability of innovative legal solutions in the market prompted her and her family to consider relocating permanently to the city where the client’s headquarters are located.

Another key aspect that forms the bedrock of sustainable trust between a company and its law firm is managing the issues that relate to conflict of interest. Law firms gain considerable domain expertise from providing constant industry-specific support to the client’s company, which makes them an attractive prospect for rivals of the client’s company.

TACKLING GREY AREAS

The law firm, therefore, is entrusted with the delicate task of walking a thin line between staying competitive and being active in the industry, as well as ensuring that there is never a conflict with the client. Interestingly, when a law/regulation is grey on a particular aspect, the legal advice rendered to a client takes into account the prevalent industry practice.

So, a law firm cannot sequester itself from its client’s competitors, as doing so renders its legal expertise stagnant and unidimensional. At the same time, the principle of avoiding conflict of interest must remain sacrosanct.

To build strong working relationships undoubtedly takes time and effort outside of the actual work for a client. But keeping the long-term goal in mind, external counsel need to make an extra effort in offering assistance when opportunities arise, and invest proactively in the relationship. Doing so allows a firm to provide additional value, anticipate legal needs and show it has a keen ear.

If clients do not feel a personal connection to external counsel, the latter is at risk of losing them. Relationships grow and evolve when external counsel exceed expectations. A personal connection can often prevail over market trends. Clients invariably come back to counsel who go beyond the limits of work and devote time, energy and resources into understanding their business, ethos, culture and individual requirements, even if this means burning the midnight oil and sacrificing one’s personal life.

Managing partners should let their firm follow the growth story of their clients. Relationships can be built, but cannot be sustained unless there is empathy. External counsel need to put themselves in the client’s shoes to demonstrate their commitment to their vision and needs. This builds confidence and trust between a law firm and its clients, and ensures that the symbiotic relationship is a successful and sustainable one. In this sense, for good or bad, you reap what you sow!

SMITA PRIYADARSHINI is the senior managing legal director at Dell.