Client feedback – Insights into general counsel needs (2014 part one)

Posted on: August 14, 2014

In each edition, The Lawyer magazine interviews an in-house lawyer or Group Counsel. I picked up the following trends into general counsel needs and selected some highlights to inform those either pitching to or building relationships with similar in-house counsel.

Trends

  1. The importance of on-the-ground local counsel
  2. Use of preferred firms rather than panels – but reduction in number of advisers
  3. Restructuring beyond the “core, cream and commodity” approach and growth of in-house teams
  4. Broader role of general counsel – primarily strategy but also CSR, risk management and audit
  5. The popularity of secondments
  6. Differentiation through service excellence and need for fast response to Internet issues
  7. Fee pressure and fixed price arrangements (budget reductions achieved by keeping work in-house)
  8. Increasing importance of industry specialisation
  9. Role of in-house counsel in project managing both external legal advisers and internal projects

Group General Counsel of Abercrombie and Kent (Travel) – 14th July 2014

  • Uses Skype and videoconferencing rather than travelling where possible
  • He instructs local counsel as having trusted advisers on the ground who are able to obtain licences and authorisations is crucial. He seeks introductions to these from a City firm which provides a shortlist of three in a jurisdiction and he flies out to meet them
  • He uses a niche practice for help with travel industry law and the legal department at the Association of British Travel Agents (ABTA) and gives credit to the association’s quarterly legal affairs meetings for general counsel in the sector
  • He insists on fixed fees which smaller local firms (an eighth of the cost of larger firms) have little difficulty embracing
  • He sees it as his responsibility to ensure that when he first instructs a law firm he helps them understand how the business works by bringing them into the office and letting them ask questions to become more commercial and put fees in the correct bracket

General Counsel at Premier Farnell (IT distributor) – 21st July 2014

  • What sets law firms apart is customer service – how the advice is delivered
  • A poorly written note for the CEO and CFO from external advisers (“They either didn’t listen or just wrote the standard memo they would always write”) .had to be rewritten
  • There’s no formal panel and no legal budget – everything is done on a case by case basis although he favours three firms
  • With much of the business reliant on the Internet – speed is of the essence
  • They operate through the Internet in many jurisdictions – and it is often not cost effective to check the law in every country so broad knowledge is used and a call made on risk and reward
  • China presents real complexity and legal advisers were used at every step
  • He also heads up the Corporate Social Responsibility (CSR) programme and leads relationships with local schools and collaboration with a university

UK and Ireland Head of Legal, Paypal (E-commerce) – 7th July 2014

  • Slashed legal bill five-fold in four years
  • Reduced the number of advisers used and now operates a small panel (four firms) across Europe – and grew the in-house team to six (indicating he can hire a lawyer for £70,000 compared to advice on one matter from an external firm costing £50,000) where he rotates responsibilities
  • He spends a lot of time briefing law firms – an investment from both sides – and prefers to develop a close relationship with fewer firms
  • Likes secondment arrangements and CPD training for his team
  • Provides billing guidelines which firms must sign – this includes capped fees for larger pieces of work and hourly rate deals for ad-hoc advice
  • He insists on electronic bills and holds quarterly billing reviews with firms
  • He sees the legal team’s role as de facto project managers for product development and marketing teams where in-house lawyers are embedded in the products team

Group General Counsel – Yoo (interior design)  – 30th June 2014

  • No formal panel but regular firms
  • GC on management team but still practicing law

General Counsel Tobacco Packaging Division – Amcor – 23rd June 2014

  • Panel reviewed every 2-3 years
  • Expertise valued but needs advisers on the ground
  • Advisers need to know the business and work in partnership
  • Wants more flexibility on billing structures

Head of Contracts and Legal Affairs – Bombardier Transport – 16th June 2014

  • Two in-house lawyers deployed full-time on two year Crossrail contract negotiation
  • 60% of their work is on tenders and 40% on project execution
  • Secondees are used to plug peak times
  • Newest advisers first seen on the other side of the table
  • No formal legal panel

Group General Counsel – Supergroup/Superdry (fashion) – 9th June 2014

  • Primary role in brand protection – GC co-ordinates IP advice in 40 jurisdictions. Main adviser for day-to-day work and another for litigation
  • One external law firm manages all European property outside the UK and another does the UK portfolio
  • GC reorganised in-house team and focused on: organising the teams into a cohesive operation; analysing the corporate governance framework and working with the board and audit committee and assessing the role of external advisers
  • “I avoid standard billable hours as much as possible…I always push for a fixed or a capped fee, and I’m pretty harsh with external advisers regarding cost management.”

General Counsel and Company Secretary – Weir Group (mining, oil and gas) – 2nd June 2014

  • Mergers and geographic structure main concern for legal advisers
  • No formal panel but a non-exclusive core group of advisers – M&A and litigation goes to external firms
  • “No one should take relationship for granted”

Company Secretary and Legal Director – Iceland (food) – 26th May 2014

  • Operates an approved list rather than a formal panel and includes firms for large corporate transactions as well as firms in Northern Ireland and Scotalnd
  • Primary consideration when instructing private practice firms is accessibility – her major bugbear is voicemail (she wants mobile numbers and lawyers’ secretaries details)
  • Private practice lawyers must also have a commercial ethos and understand the business “We have a definite culture here – retail is fast-moving so you want someone who’s willing to put their neck on the line with proper advice, not sit on the fence and just tell you what the law is”.

General Counsel of Universal Music Group – 26th May 2014

  • “I can see how the length of the relationship might suggest that I’ve comfortably stayed with the same firm,” he says. “However, I’m pretty demanding, both in terms of service and costs, so it was no means automatic that we stayed with them.” His philosophy is to look at individuals at law firms before assessing the practice as a whole
  • There is a General Counsel and only four others in the corporate legal team at the business’s international headquarters in London
  • He does not run a law firm panel. He instructs specialist firms on artist agreement-related matters, but for almost all Universal’s corporate work – and certainly all competition work – he picks up the telephone to King & Wood Mallesons
  • “We have robust discussions around bills” and remains a supporter of the billable hour. “My approach is that I prefer to do it on a time-spent basis because that’s fairer… It can be a hostage to fortune if you’ve agreed a fixed fee and then the transaction turns out to be considerably more complicated than anticipated. In that event, you’d probably end up renegotiating the fees anyway. I would find it difficult to run a transaction where our external lawyers are effectively working for free…On smaller transactions we might consider fixed fees, but hourly billing is still the fairest way to do it for the larger matters. That said, we do have discussions about the levels of fees, the chargeable hours, and whether parts of the transaction merited that much time being spent.”
  • “The key is complete transparency…And we want to be can-do lawyers rather than can’t-do lawyers. That means when a client comes to you and says ‘I want to do a deal’, of course as lawyers we could write a 40-page memo giving all the reasons why the client shouldn’t do that deal. But ultimately, you need to engage fully with the client and the business in terms of what they want out of the transaction and the commercial context, and to try and find a way you can achieve those objectives.”

General Counsel and Company Secretarial – Britvic (Drinks manufacturer) – 12th May 2014

  • Responsible for legal, secretarial, estates, audit and risk, quality, safety and environment
  • 50 people in the team of which nine are lawyers
  • Restructured from experts in particular areas to aligning lawyers with relevant business units
  • Secondments encouraged for a minimum of six months and they have trainees
  • No formal panel and choice based on “people not the law firm brand”
  • Works with procurement team but legal department has final decision on advisers
  • A Board member who has a say on company strategy
  • External budget fluctuates between £1m-£2m

General Counsel – Yum! (Restaurants) – 7th April 2014

  • 27 firms used in total – 15 regularly
  • Review concentrated on whether they were a good cultural fit and had adequate experience of the market (tender process included a question about a significant market trend and how it might affect the business and to share the single best piece of advice they had been given. One pitch has been presented as a menu)
  • Secondments important
  • Prefers fixed, capped and blended rates

Head of Legal and General Secretary – Scottish Power (Energy) – 17th March 2014

  • Secondees valued

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