Failure to be clear and concise

All the in-house lawyers interviewed by ALB note that it is the ability of firms to offer quality and commercial results that will dictate who gets legal work from companies. The survey reveals that firms who can guarantee high quality work, meet deadlines and be proactive in the running of projects have a good chance of continuing to receive work from in-house clients.

Nonetheless, the consensus opinion is that most law firms struggle to deliver these apparently basic demands. “What law firms need to understand is, compared to when I was a partner at a law firm, I now receive 10 times more e-mails, am looking after 10 times more matters and can be working on projects in four or five different countries at the same time with only a small in-house team. I do not appreciate having to proof read documents and correct typos, major drafting mistakes – this happens all too often,” Flavell says. Elliot cites similar experiences and notes that some of his external lawyers never fail to disappoint. “Some of them have problems with the basics. I don’t want my external counsel to just play lawyers. I give them work and I get the impression that they give me advice with one eye on their cost agreement. I don’t want wishy-washy advice; I can’t take that to my board.”

In essence, in-house lawyers are looking for their external lawyers to be proactive, to be a step (or two) ahead of the game – but not too far ahead. “The APAC region can be very difficult and the legal position is often unclear. However, a lawyer who gives me advice along those lines is of no use. I expect firms to give me their ‘best call’ on how they think we should proceed and give me reasons to back up their view – I’m sorry to say this does not happen very often,” Flavell says. “On major projects I want my lawyers to be three or four steps ahead of us taking charge to ensure we get where we need to be. I have found only a couple of lawyers that do this.” But external advisors need to find the balance between being proactive and doing more than was asked, explains the general counsel at the US-based investment bank. “I really just want lawyers we use to do what we ask – nothing more, nothing less. They shouldn’t do work we haven’t briefed them on, they should just provide the advice.”

Be flexible

The efforts of law firms that have been trying hard in this area have not gone unnoticed. One area in which this is most apparent is in relation to fee arrangements where flexibility has become the order of the day. Having said that, all in-house lawyers ALB interviewed noted that there is still some way to go but this does not necessarily mean a massive reduction in fees. Rather, it is the little things that count.

In-house lawyers want some uniformity. “Our external lawyers have been very flexible in terms of offering
fee reductions, extended payment terms and holding back on some work,” Ingram says. “They have shown they are willing to be flexible and – this is perhaps most important – they have an understanding that we must work together through this difficult time.” Nevertheless, external lawyers should not be surprised if an invoice is returned to them marked with a ‘please explain’. “What irritates me the most is when I get an e-mail from a law firm and about 60 other lawyers at that firm are cc’d in. You can bet that the other 59 lawyers will charge for receiving, opening and reading the email. When I get a bill like this I send it back straight away. Firms that are not flexible here and more generally snotty about reducing fees wear my patience; we can take our work elsewhere,” says the regional general counsel of a US-based investment bank.

And the consensus is that despite the more flexible approach being adopted by firms, the charge-out rates at some international firms operating in the region remain too high, disproportionately so according to Flavell. “The fees being charged in Hong Kong and China are still excessive. Just because a firm is a ‘Magic Circle/ Wall Street’ firm in the UK or US does not mean they justify the same fees in HK and China. Some firms and lawyers are excellent and may justify these fees, but many of these firms significant amounts of the time cannot,” he says.

Is this the window through which those firms outside the Magic Circle may attract more work from the region’s largest multi-nationals? The consensus is that this is a distinct possibility.“There are various second-tier UK and US firms or first-tier Australian firms with offices of similar size to Magic Circle firms in the various parts of the region with experienced partners who have been working in the region for long periods and offer much cheaper rates. If I can obtain the services of a very good partner at the same rate as a mid-experienced associate from a Magic Circle firm, why use the more expensive firm?” Flavell asks.

His question is one currently being asked by in-house teams across the region. All of the lawyers ALB spoke to agreed that the answer isn’t likely to result in legal departments cutting the number of external firms they use or – as is the case in the US – see the end of the legal panel.

“The very point of the legal panel is that it offers companies who have operations in different locations around the globe access to knowledgeable local legal advice,” says Ingram, who uses one US-based international firm for most of his external legal counsel.

It seems that many companies are likely to retain their legal panels in the near future, if for no other reason than the size of the region means limiting external counsel to one or two firms is not practicable. Nevertheless, as the ALB In-house survey 2009 indicates, there is no guarantee that the size or composition of such panels will remain the same.

“I think it is fair to say that we are looking at the number of firms we use in the APAC region and looking to reduce the number and build stronger relationships with a smaller number of firms. Of course the size of the region means it is impossible to use the same one or two firms across the region,” Flavell says. ALB 

NEXT: See all the data from ALB In-house Survey 2009

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