In-house ACCess : In-house ACCess: Association of Corporate Counsel : ACC : The In-house Counsel Bar Association

 (Read Part 1)

With the location of Christmas settled, plans were made for arrivals. My wife and I would depart from Cleveland in the evening on December 20^th arriving in Torino (Turin) Italy in the late afternoon of December 21^st. Our oldest son would arrive from China in Torino. This would give us two days before Christmas and my son in China had arranged for us to meet many of his friends during that period. But that was not to be.

When we arrived at the airport in Cleveland, many feelings returned from my days as a traveling lawyer. I was Infinite Elite Platinum on Continental, so I had spent many hours in airports and planes. I had forgotten in the last three years since I retired that this was a rather taxing experience. Suddenly our phone rang; it was our son calling VOIP from Italy. He asked whether we knew that our plane to Chicago which was in Dulles had its departure delayed due to the snow storm that had battered the east coast. I did not, but I would ask the gate agent, who was not aware of the delay and had not updated the departure board. I could not miss the irony that I was better informed than an airline employee due to information I was getting from Italy.

Those of you who travel a lot will recognize that airlines typically post extremely optimistic estimated departure times which are gradually revised to much later realistic times. This may be a result of a lack of information, but I often suspected that it was designed to discourage passengers from looking into switching to another carrier.

Of course, the departure time of our flight to Chicago was finally revised to a time that dashed any hope that we would connect with our Lufthansa flight to Munich. When it became clear that the United agent still expected that we would all still be going to Chicago, my Italian source of flight data pointed out it would be pointless, because there were no flights to get me to Italy until the next night.

 Read Part 1 of Larry's holiday travel experiences.

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The ACC Value Index (AVI) is a tool meant to inform in-house counsel decisions as part of a larger process of selecting and retaining a law firm. The AVI is a searchable database for in-house counsel to share subjective evaluations of the firms they engage.  It is key to note that this is a process that already takes place naturally among in-house counsel who often seek their colleagues opinions on firms that offer good value.  The Value Index builds upon this tradition by encouraging in-house counsel to contact or “ping” other evaluators to discuss the firm’s work in greater detail.

As we begin the process of rolling out law firm access to certain information in the Value Index this week, I want to take a moment to outline the who/what/when/where/how and why underlying this process.

Who – Access is being offered to law firms evaluated in the ACC Value Index since its October 2009 launch.

What – Each evaluated law firm will be able to access aggregated results pertaining to that firm.  This includes average scores for that firm by criterion, office location and matter type.  The firms will also receive overall Value Index averages for benchmarking purposes. Here’s an example of what a law firm would see:

When -- Starting today, February 3, 2010, through the foreseeable future.

Where – Access to the information will be available to law firms through an online portal on ACC’s Web site using the protocols below. 

How – Here are the key steps for law firms to gain access to the AVI information:
1.    Firm management decides who in the firm will manage the AVI access to the firm’s results.
2.    The firm representative who will serve as the “administrator” on behalf of the firm goes to the AVI Law Firm Access Portal at: http://www.acc.com/valuechallenge/valueindex/lawfirms to obtain administrator access.
3.    The administrator can then view the firm’s AVI results anytime and share them within the firm.

Why – As I wrote on this blog last October during the ACC Value Index launch, coinciding with the overarching goal of the ACC Value Challenge – information gleaned from the AVI will help to foster a greater dialog between clients and their outside counsel.

The AVI is only one part of the ACC Value Challenge, which encompasses a larger effort to reconnect value to the cost of legal services.  Other aspects include a) “Meet. Talk. Act.” which encourages clients and law firms to engage in discussions about value and their relationship; b) a law firm economic model; and c) specific resources with examples of value practices and ideas on ‘how to’ implement practices focused on value.  Resources, success stories and updates are continually added to the ACC Value Challenge community pages and we encourage law firms to get involved and help to provide additional information/resources.
 

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In Susan Hackett’s blog on the Textron case she states that the privilege is under attack. Let me suggest, at the risk of inspiring disagreement from Steve Bokat, that what is really under attack is the notion that in-house counsel is really practicing law. Susan says as much:

Can anyone out there honestly believe that this case would have been so decided or made it to the US Supreme Court as an ongoing debate if the lawyer providing the advice was an outside lawyer and not an in-house lawyer?

(emphasis added)

You see, if we win we will not have won the debate and the debate will continue because the very brief ACC filed in the Supreme Court undercuts our position. Did I read the brief? No. How can I make such a claim then— because I read what counted— the signature line— and looked at who was Counsel of Record and it was not in-house counsel. And even though Susan was key to the preparation of the brief at the Supreme Court, no one will believe it. If Textron’s in-house counsel was Counsel of Record, Susan’s role would be perceived differently.

The First Circuit opinion is worth a read because it is clear that they did not believe that there was serious anticipation of litigation—the unwritten reason because if you had you had brought in your real trial lawyers—in their mind just routine stuff was going on. Not only is Susan right the result would have been different if it was outside counsel; it would, I suggest, also have been different if Textron in-house lawyers had argued the case.

The other reason we cannot win in court is because this debate has been going on for as long as I have been in the practice of law; I have heard it in my company when business people make comments about who are the real lawyers. And it is a debate that has been going on in ACC since the very beginning—do we do it ourselves or do we let outside counsel do it—those lawyers out there who are always willing to lend a helping hand, but at a cost whether you want to admit it or not. When they co-author an article in the Docket, no one really believes the in-house lawyer really had anything to do with it whether she did or not.

We have a serious image problem and the first step to fixing it is not a favorable decision by the Supreme Court, it is to admit it is there. The second step—is to go on the wagon.

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ACC filed an amicus with the Supreme Court on January 27, 2010 in the Textron case. This is the third brief we've filed in this matter as it's cut a tortuous path through the appeals and circuit courts; the press release we issued recounts it all for those inclined to read it.

The case is about whether the attorney work product doctrine extends to the protections of an in-house lawyers internal analysis and notes of a proposed tax position the company was considering and that the IRS eventually challenged. This case, and I've done many of them for ACC, makes me so hoppin' mad that I decided I needed to share my pain with all of you. (You're welcome.)

Lets remember that attorney-client privilege protects the clients right to confidentiality of the communications they have with their lawyers. It protects the conversation the request for advice and the delivery of the advice by the lawyer. Work product doctrine is an offshoot of privilege, but not the same thing: it protects the attorneys mental impressions and analysis and is limited to protecting that which the attorney works on which was prepared in anticipation of litigation.

Way back in the dark ages when the Supreme Court defined the concept of work product protections in Hickman, the concept of in anticipation of litigation was perhaps narrower. Companies didn't have in-house legal staffs and not much work was done in the field of preventive law or compliance practice, in part because there wasn't much regulation to comply with, and in part because companies didn't need to call a lawyer until someone sued them. But courts from the Supremes down have broadened the parameters of work product protection as the years and the complexity of corporate legal practice has expanded: recognizing the important role that lawyers play in helping their clients navigate regulation and a litigious world, and knowing that companies should make decisions on a daily basis with litigation and risk avoidance in mind, courts in every circuit have issued opinions recognizing that lawyers not only do, but should be working 24/7 in anticipation of litigation, even if the case has not yet or hopefully may never be filed.

In todays world, pretty much everything an in-house counsel does is in preparation for real or potential litigation.

So for the First Circuit opinion which were appealing here to now suggest that a in-house lawyer in the daily course of analyzing the risk and best actions his client must consider when adopting this or that tax position isn't in anticipation of litigation but rather is just some kind of business-not-legal number crunching is just silly. It ignores reality. And the public policy implications for lawyers and clients (as well as the stakeholders who rely on the companys legal health) are dire. Read the brief if you don't understand why. And for those of you who already get it: time to get mad.

Can anyone out there honestly believe that this case would have been so decided or would have made it to the US Supreme Court as an ongoing debate if the lawyer providing that analysis was an outside counsel and not the in-house lawyer? Do you think that the IRS would have subpoenaed the XYZ AmLaw 50 New York firm partner to produce his files containing his legal and risk analysis of the tax position being considered by his client at Textron? Of course not. The IRS issued document requests for the company, and the in-house lawyers files were examined as part of that process: that which could be produced was, and that which was lawyer-client privileged or attorney work product protected was not. The courts decision to not afford protection to the in-house lawyers work product is only made, to my mind, because there are still folks out there, in 2010!, laboring under the misguided belief that in-house lawyers somehow aren't really lawyers, but some kind of quasi-business/quasi-legal functionaries who don't quite qualify for the same status and protection we would afford to outside counsel at firms. While I recognize that many in-house counsel are extremely business savvy and have provided increased value to their clients by approaching their legal practice with an institutional and deep knowledge of the company and business which is their client, and that indeed, some in-house lawyers carry responsibilities in their job that aren't legal, that’s not what’s relevant here when discussing these attorneys legal work papers and analysis. The fact that they deeply understand their client doesn't mean that in-house counsel are not lawyers or that their work product isn't just as clearly worth protecting as the work product of lawyers in outside firms. Most outside counsel I know spend a lot of time and energy trying to assure that they are just as business savvy and able to help their clients fulfill business needs. This is simply a surreal conversation to be having if you're an in-house lawyer in the 21st century.

Many of you have (been unfortunate enough to have) heard me give my trademark privilege is under attack speeches or have read my previous diatribes; maybe you've followed and recognized ACC's highly focused and very successful efforts at pushing back abuses by prosecutors and regulators of corporate rights to assert the privilege when under investigation; perhaps you recently joined us in demanding protections for the risk analysis that lawyers provide to their finance folks in setting litigation reserves, which is under attack by the FASB folks looking to revise FAS 5: all of those efforts, crucial as they are, pale next to the implications of this case. This is an attack on the most fundamental premises of a lawyers value and work product: the ability of a lawyer to analyze the facts and the law to develop the guidance that clients need to do the right thing. And if this doesn't get fixed, your work product is about to become Exhibit A in your adversary brief. Get on board, corporate legal community, and get involved! Your rights as a lawyer, your clients rights to confidential counsel, and the very underpinnings of value in your client relationships are at stake.

Contact me at hackett@acc.com

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As we enter 2010, many law departments and law firms are still reeling from the tumultuous paradigm shifts of 2009, and working to bring order to the budget and staffing chaos of the last several months.  If 2009 was the year we all scrambled just to get it done for less and with fewer hands on deck, 2010 will either be the year that we all go back to doing things the way we did before, or we decide we’re going to implement practical changes in the way we work together that that will improve the management of our relationships and the predictability of our costs going forward.  

While it’s easy to sink back into familiar habits, I don’t know anyone on the client side who is eager to tell their management they’d like to re-institute higher fees typical of the “Golden Age of Law Firm Profitability,” forego new opportunities that were successful in lowering or better managing costs for a number of departments and firms, and return to the unpredictable budget and soaring costs we all abhorred.  As you gird yourself for the work of re-inventing and then cementing new ways to work going forward, here are 5 ideas for relationship managers in both firms and departments to consider.

1. Assess the State of Your Union and Meet.Talk.Act:  Outside the heat of any particular retention or matter and with your best firms (you shouldn’t try this with everyone before you try it with 3 or so strong relationships and get better at the process):  sit down and Meet.Talk.Act.   Talk openly and without reproach about how your relationship can improve in terms of budgeting practices; metrics, goals or targets you’d like to set and targets to process efficiencies you’d like to examine; knowledge management systems you might adopt; performance feedback mechanisms you could adopt to drive continuous improvement and team engagement; new ideas for staffing and fee structures; in short, better ways to institutionalize the relationship to create sustainable profitability for the firm and seamless value-based service at a predictable cost for the client.   

While there will likely be unique ideas or concerns to address with separate clients, matters or firms, the point is to begin a process that’s not just based on evaluating the relationship one experience at a time, but looks instead at universal “truths” affecting the entire relationship and every matter.  And I strongly encourage you to make lists of things you’ll attack immediately and things to work on over time: it’s often too hard to do it all at once, so adopt a realistic and ongoing process to make sure you get it right and folks see how they can succeed; there’ little merit in doing it stupider faster.  

Just choose some things to do now and get started before the window of acceptable experimentation closes.

2. For both new and existing matter types, do the hard work up front:  Do your “relationship” work in defining scope, expectations, staffing and fee structures and such before the legal work begins:  don’t begin work without an mutual understanding of what is and what is not acceptable and “valued” in a matter.   It’s too easy for busy people to look at the pile-up on their desk and simply “throw it over the wall” to whomever is going to work on it, without making sure that everyone agrees to and understands the client’s fee expectations and ultimate goals and expectations.  (And since the client itself usually doesn’t know what its specific goals/expectations should be for any matter, that’s something you’re going to need to help define, too.)  

Scoping work early on is necessary to avoid the problem of spending large amounts of unproductive and even relationship-damaging time managing the bill after the work begins.  While you can always amend your budgets or work plans as the project unfolds, be as specific and detailed as possible at the start, and then save your time and money by unleashing the team members to do their work within the defined parameters – it’s now their responsibility to do so or to propose needed amendments.  

For folks at firms, try to define what is not covered by the retention’s terms and safety valves for unanticipated (but not unimaginable) exigencies since the goal of up-front scoping is to get in-house counsel out of micromanaging and you best positioned to succeed in delivering what you’ve promised.  

Both firms and departments may wish to invest in creating standardized decision trees, process maps, or project management plans for different kinds of work that their clients repeatedly experience, and then reap the benefits of simply adapting or customizing these “form” documents to the specific needs of every new matter that lands in front of you.   You will now clearly see which work is operational and which is the “norm” that falls within understood processes and parameters (that’s not to say all such cases are not important, just not unusual), and you will be able to focus on cases that truly are different or present new strategic challenges.  

Final note:  Make sure you talk about more than fees and timing when setting up your scopes: discuss staffing options, what kind of expertise is needed, what knowledge can be recycled from other work, what new processes might improve the workflow, where non-lawyers can help, etc., since the savings from good advance planning in those areas may be greater than that realized in any other cost-related discussion.

3. Change management is all about the people, not just the process: The most important role you play as a relationship manager is understanding that you can manage processes, but you don’t “manage” people:  you lead them.  EVERY member of the team – inside the department and inside the firm – must understand what the relationship managers agreed the work is worth, how it should be done, and how it is that the value of the product the team produces will be judged since you can’t lead them and they can’t follow you unless the direction is shared.  Change is the hardest part of the process as we look to move toward more efficient or alternative models from those we know.  

Remember: people don’t like to change (especially lawyers) … it’s hard work to change (and easier to do the same things, even failed things, over and over) … there’s always risk in new or untried methods … it may be unclear if those who change will be rewarded, and there’s usually evidence that those who simply keep their head down are “safer.”  So make the path clear and unambiguous; communicate about what you’re doing with everyone who touches the work, and make change requirements applicable to everyone; enforce the consequences of non-compliance evenly (or apply the rewards of success visibly).  To succeed in changing practices, an agreement between two relationship managers to go a new route will not suffice; it must be the first step in a conversation that each team leader takes to every member of their staff and then leads them to succeed in implementing.

4. Define goals and set measurable targets and timelines:  Related to this, set targets and goals for matters and people involved in the process (both in the firm and department). Then, measure performance and tie compensation/fees and evaluation to performance-to-goals.  If goals and targets are institutionalized, if they include both long-term and short-term measurements and steps, and if they are discussed in advance and frequently reviewed, then the evaluation of performance-to-goals is not as personal or mysterious (but rather, is simply institutional), it’s more approachable and manageable, and will not be as easily excused by a never-ending list of special circumstances to explain away this or that failure or deviation.  

No one likes to do performance evaluations – but making them the norm for everyone and a part of the process of working on every matter actually makes them easier and better (as well as more “impactful”).  And you shouldn’t be the only one responsible for them; spread the accountability throughout your ranks.  Finally, both inside and outside counsel should be subject to the same evaluation processes, even if their goals and targets are different.  The ACC Value Index is also a tool you can use to see how other clients evaluate the overall performance of their outside firms to compare how your firms stack up or look for firms that have excelled where your may not.

5. Support the development of (and experimentation with) new skill sets and flexible toolkits:  Every firm and department needs a flexible tool kit that allows them to consider a variety of options for how any particular matter or group of matters is accomplished.  Some tools may focus on speed of delivery, some on process and improved efficiency, some on cost effectiveness (both in terms of predictability or lowering costs).  There should be no presumed “default” mode for doing work unless that is a decision for a kind of work that the department has made and wishes to implement going forward.  Once a decision is made that allows the firm and department to select the best method by which to handle a matter (fee structure, alternative staffing, etc.) that creates an alignment and balancing of interests, then clients need to allow firms to profit if they do well (and not ask them to return a windfall when they’ve assumed a risk and “won”), and firms need to get comfortable with the risk that sometimes they’ll swallow the occasional matter that does not return their costs in pursuit of long-term profitability from the relationship.  

You will not find value in any relationship founded on a one-off mentality, or by seeking to own one-sided leverage in every matter.  If your philosophy is “heads I win, tails you lose,” you are not a partner in a relationship, and you will not enjoy the benefits of a long-term commitment.  Indeed, think of your relationship as a marriage, wherein occasional losses or failures are offset by the benefits of an institutionalized, trusted and alignment with people you like to work with who share not only your daily work, but your goals.  In such a marriage, the firm can plan to be profitable, train its younger lawyers and derive a satisfying portfolio of work; the client has the confidence of trusted counsel that returns predictable, cost-effective results and doesn’t need to be micromanaged.  Value relationships require clients to incent and reward firms to profit by making it their business imperative to maximize efficiency, focus on results through great staffing decisions, institute transparent and meaningful knowledge management techniques, and improve internal process management.  This is the essence of client/firm alignment.
 
Bonus Fundamental:  Transparency and accountability are requirements for the personal integrity of relationship managers.   The in-house manager must learn to tell his trusted relationship partner what the matter is worth to the company without games, and the firm relationship manager must be willing to stake her reputation not just on the advice she gives and the results she delivers, but the accountability of the firm to do the best it can for the most reasonable price.  Firms that get really good at process management and staffing decisions (it’s presumed that they’ll practice great law!) will have totally transparent costs that they will happily and openly shared with trusted clients; clients must not “punish” them for that transparency (especially since there are still so many firms that don’t make the commitment to improved efficiency are nonetheless rewarded with less scrutinized business practices and heftier profit margins).   

There are still some lawyers in some firms who do not yet realize that when the bubble burst in 2009, it burst in part because law firm profitability expectations in many big firms were far too often unsustainable, if not ridiculous.  Likewise, corporate counsel must respect that fact that the firm needs the incentive of profiting in return for its improved efficiency and value.  The “new” aligned relationship is not a zero sum game -- all boats will rise when the focus is on delivering great value and results for the end-client.

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Fred Krebs, in his President’s message, in the January/February 2010 issue of the Docket, encouraged measurement of law department performance. The central themes of his comments are:

The more we measure our successes, our challenges and even our failures, the more we will learn how to carry these experiences forward in a meaningful way into a new year.

Allow me to express some reservations, but first I should tell you my bias—I am Mr. Measurement. So what is my problem?

When ADR was touted as the certain means to reducing litigation costs and study after study appeared supporting that fact, I complained we should measure these claims in a “scientifically valid manner.” The key is scientifically valid. There was little in the deluge of materials from such notable organizations as the ABA and others that was scientifically valid. There were explanations as to why ADR just had to be more cost efficient and numerous opinion surveys claiming it clearly saved money.

In the context of the Civil Justice Reform Act, I had the opportunity to persuade the Federal District Court for the Northern District of Ohio to let me study these claims. Unknown to me, the Administrative Offices of Federal Courts had engaged Rand to do a similar study. Using two different methodologies, but both looking at actual costs with controls we reached the same result—ADR had no impact on costs.

Measuring is not a simple task and my experience is that much of the measuring done by legal consulting firms is irrelevant at best and misleading at worse, since it involves questionable comparisons and often is not measuring the right thing.

I am in the process now of conducting an enhanced study of ADR with my co-chair a law professor at Case Law School, with the assistance of a professor in social science methodology. We find ourselves continually challenged to insure we are measuring the right thing, the right way and for the right reason.

So before you charge off, inspired by Fred’s challenge to measure, let me suggest you think through three issues. First, why am I measuring? Second, what am I measuring? And third, how am I measuring it? I will explain the importance of each issue in future blogs.

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What does this blog have to do with the legal profession? Absolutely nothing. But to my mind it is an unusual adventure worth sharing. It is the story of the 4 day effort of my wife and me to meet our two boys in Italy for the Christmas holidays.

Why Italy? Well in part this reflects the truth that the pollster, John Zogby describes in his recent book: The Way We Will Be. Although I met John for the first time a few months ago when he spoke to the Cleveland Council on World Affairs to which I belong, we have a common background. We come from the same city, Utica, New York where John still resides and we have common acquaintances. I even played high school football against his cousin.

In his book John describes the globalization of the generations of Americans in their mid thirties and younger. Our family, it appears, comes close to being the platonic ideal of that image. I spent a good deal of my legal career representing foreign interests before the US courts—most notably the challenge to the use of unitary taxing schemes by certain states, California in particular, upon the global income of foreign multinationals operating through subsidiaries in the state. This effort, the efforts to restrain US courts from their predilection to exercise universal jurisdiction on matters clearly beyond their purview, and the fact that I prominently displayed my Rome, Italy license plate and a picture of me on my Ducati in Rome, appears to have had its influence on my sons (see below).

The oldest is a 28 year old entrepreneur who now lives in China operating a business he started: www.attigohk.com . He is fluent in Mandarin, reasonably fluent in French and studying Cantonese. The youngest, resides and works in Italy where is responsible for exports at www.artesina.com . He is fluent in Italian, reasonably fluent in French and studying Bulgarian.

The problem for holidays was how to get together as a family for the holidays. We had not been together for some time since my oldest son had been in China for going on three years and the youngest was in Italy last Christmas. I was retired and the oldest owned his own company, so we had the most flexibility with schedules. Thus, Italy seemed to be the location for a family Christmas.

Larry Sailbra, Rome, Italy 1967

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Regardless whether the recent e-mails concerning the AIG bailout that have surfaced (as a result of Congressman Issa’s FOIA request) do or don’t indict Geithner, our Turbo Tax challenged Secretary of the Treasury, they are, at the very least, a huge embarrassment to the legal profession. Although the Fed’s General Counsel claimed that Geithner had no clue as to what going on, hardly a resounding endorsement of his management skills, it seems clear that the Fed and AIG’s in-house lawyers did.

There seems to be little doubt that the failure to disclose was clearly illegal.  As the crisis develops, the next pressing questions are, What is the Attorney General is going to do?  Is the profession going to be embarrassed again? And, if it becomes clear that enforcement action is required and the Attorney General does not vigorously enforce the law, What is the ethical obligation of responsible government lawyers?

A number of years ago, ACC had a significant internal debate concerning whether in-house lawyers who were punished for insisting that their client act in accordance with the law should have access to the same legal remedies as other employees who were terminated or otherwise punished for insisting on legal compliance.  The debate split over the issue as to whether the in-house lawyer was simply required to resign and have no further rights against the company. My recollection is that no one believed that the lawyer aware of improper conduct by the client could turn a blind eye and go on as though nothing was happening.

Many government lawyers are likely to find themselves in similar positions as in-house attorneys discover that the company’s general counsel is either condoning - or actively participating - in illegal conduct. As this crisis plays out, details of the conduct becomes clearer and proper course of legal conduct becomes far more defined, the actions of the Attorney General may once again test the resolve and the credibility of our profession as we see how the government lawyers react.

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ACC Board Members See Opportunities in the Midst of Greater Regulatory Scrutiny, Increased Client Demands & Efficiency Directives in the New Year

As 2009 comes to a close, some will look back on the past year disheartened by the economic upheaval that occurred, while others will look ahead with cautious optimism, confident that in the midst of challenges the coming year will bring lucrative opportunities for growth and prosperity. Articles and Blog posts abound, with everyone offering their predictions for the coming year. While nobody has a magical crystal ball to foretell the future, we can learn from events of the past and the current environment to not only predict, but also prepare, for what is yet to come.

I have always found our ACC community to be a great source of support and insight and as Ivan Fong, ACC’s former Board Chair, noted in a previous ACC Docket message, “During times of economic stress, it is important to hold fast to your core values and to the people … who can support you in your time of need and give you hope and inspiration.” By tapping into the collective wisdom of ACC’s Board of Directors, we can all glean added insight to stay on top of the trends – and help us to prepare for 2010. 

When asked what the greatest challenges will be for in-house counsel, as well as where new opportunities will emerge, ACC Board members offer the following predictions.

David Allgood, Executive Vice President & General Counsel, Royal Bank of Canada: We will have to respond to the impact of the global financial crisis on financial regulations and I see a significant regulatory onslaught occurring, particularly for financial institutions.  

I am expecting - looking for, actually - more use of project management principles by the outside law firms I work with to ensure greater efficiency and cost containment.

Jonathan Block, Attorney, Former Vice President and General Counsel, Salem Communications Corporation: The current political winds are blowing in favor of increased regulation, and given the speed in which it is happening and the polarization of the political process, it is hard to know where we’ll land until we are already there.  With all of the changes, reduction in resources and increased pressure to take risks that will potentially jeopardize the company, the complexity of how in-house lawyers go about performing their job will continue to increase.  

The increased complexity and reduction in resources, however, provides an even greater opportunity for in-house lawyers to demonstrate their strategic value to the organization. With greater challenges facing companies, GCs have the opportunity to burnish their image as the go-to problem solver for the company. This is also a great time for companies to start building for the recovery and investing in their future. With even well run businesses having to eliminate assets to address cash flow issues over the past few years, strong companies now have the ability to acquire some especially valuable resources (including human capital) in a manner and at a price they previously couldn’t come close to. 

Jeffrey Carr, Vice President, General Counsel & Secretary, FMC Technologies, Inc.: In-house counsel must determine how to make value-based engagements the standard for their own teams while simultaneously implementing value-based engagements with their outside counsel.  

In looking ahead, I see the ACC Value Index, the client satisfaction measurement tool developed to help ACC members share meaningful information about the value they get from their outside counsel, being recognized as the industry standard.

Elisa D. Garcia C., Executive Vice President & General Counsel, Office Depot, Inc.: For in-house lawyers with public companies, we will have to nimbly navigate an avalanche of new legislation and regulation in the governance arena. From proxy access to say-on-pay, from risk committees to golden parachutes, and all the enhanced disclosure requirements that will accompany these and other regulations, I foresee substantial confusion and lack of guidance from the regulators. This is especially concerning because of the “anti-corporate” bias of regulators. I hope the regulators work with the business community to ensure that the new rules are clear and enforced fairly.  

I encourage smaller and diverse [law] firms to embrace the ACC Value Challenge as a game changing differentiator. I think the agility of a smaller firm will enable it to be more creative in bringing value solutions to corporations and thereby helping them gain opportunities they may not have otherwise had.   

Michele Gatto, Executive Vice President, Corporate Services & Chief Legal Officer, National Life Group: In the current economic environment it will be incumbent on in-house counsel to manage expenses carefully and strategically, with a focus on increased efficiency, productivity and value. This is an opportunity for in-house lawyers to demonstrate their abilities to be good leaders, as well as good lawyers. We will also need to stay focused on new developments in the legislative and regulatory environment (financial services reform, health care reform, etc.).

J. Alberto Gonzalez-Pita, Senior Vice President & General Counsel, Las Vegas Sands Corporation:  Some trends are clearer than others, and increasing regulation is one that stands out. This will happen at the state and federal levels and will impact a wide-range of small and large businesses in numerous industries. I believe we will also see increasing enforcement of existing regulations with larger fines and penalties for non-compliance. Identifying, analyzing and complying with these regulations, as well as ameliorating their impact will require a significant investment of time and resources by in-house counsel.  Another trend is the continuation of the changing dynamics between companies and their outside counsel. The economic recovery is unlikely to be fast or robust enough to diminish ongoing cost cutting efforts, and outside counsel will continue to feel pressure on their fees. The ACC Value Challenge will continue to gain momentum as an effective way for in-house lawyers to achieve demonstrable savings and efficiencies. We will continue to see more alternative fee arrangements and less hourly rates through 2010 and beyond.

There will certainly be numerous changes in store for specific industries (banking and finance, insurance, health care, pharmaceutical and hydrocarbons), but I'm not a good enough prognosticator to say what those will be. "Legal" change is in the air more so than in years past, and I believe this will impact the vast majority of in-house lawyers in some fashion.

Teresa Kennedy, Assistant General Counsel, Cox Communications, Inc.: Lawyers will be stretched by handling more matters than ever in-house, with less support from our business partners.  This situation will require us to be more actively engaged in vetting business issues, which of course, presents us with both opportunities and challenges!

Jonathan Oviatt, Chief Legal Officer and Secretary, Mayo Clinic:  We will continue to see increased expectation that legal services will measure up to the same metrics of "quality and value" that are applied to all other shared services in the organization. Effective lawyers will be those who intentionally partner with clients to improve quality and value, while reducing expenses.  With increased regulatory complexity and decreasing budgets, effective risk balancing and risk management skills are essential for effective lawyers.

"Tone at the Top" has never been more important and effective CLOs have a critical role in ensuring that our clients do the right thing. Additionally, it has never been more important for us to avoid taking ourselves too seriously—we must maintain balance.

Carol Ann Petren, Executive Vice President & General Counsel, CIGNA Corporation:The greatest challenges for in-house counsel will definitely include an increased focus on executive compensation and risk management. There should also be an increased willingness to take advantage of developing business opportunities with a more stable economy and clarity on the regulatory front.  

Eric Reicin, Senior Vice President & Deputy General Counsel, Sallie Mae, Inc.: In times of stress, uncertainty and an enhanced regulatory environment, in-house counsel need to be more than practitioners, they need to serve as both a trusted advisor and business partner. During the last 20 years - especially the last five - we have seen a dramatic shift in the speed and efficiency of the practice of law with the addition of each new technology (overnight mail, fax, electronic word processing, electronic legal research, e-mail, e-filing/knowledge management, internet search, video conferencing, intranets, IM, BlackBerry, iPhones, Twitter and private secure social networks), and this trend will continue, mostly to the detriment of our personal lives and to the perceived benefit of our clients. It will continue to fall to us to encourage our clients to prioritize, recognize when immediate turn-around is required and when further thought is preferable. Thoughtful legal advice often takes more than 140 characters of text.

Martine Turcotte, EVP & Chief Legal & Regulatory Officer, Bell Canada: One of the major regulatory and investor areas of focus will be on executive compensation where more disclosure -similar to a management and discussion analysis focused on compensation – that is now required. While we had to go through this as one of the first Canadian issuers last year, regulators have kept a close eye on this, and now with “say on pay” resolutions having been adopted by a few issuers like ourselves, it will be an interesting discussion with governance organizations and major investors.   On the administration side, top focus will remain on outside counsel costs and the value proposal.   

Norman Wain, VP, Corporate Legal Affairs, Assistant General Counsel, The Finish Line, Inc.: I see our greatest challenge as balancing the corporate expectations while continuing to decrease (or manage) costs in light of tighter economic conditions. In-house counsel need to learn to work more efficiently, better manage outside counsel (perhaps changing fee structures) and then battle senior management to still pay attention to legal when they are desperately focused on reducing costs and cutting programs from their budgets.

In terms of prospects for the year ahead, technology is constantly changing, which creates new opportunities. In addition, we will need to monitor new government regulations and what their impact will be on our businesses.

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From regulatory hurdles - to increased scrutiny - to strengthening relationships with outside counsel, it’s clear that in-house counsel will have their hands full in the coming year. In addition to increased government scrutiny and regulations, I see increased regulation of the legal profession, with more laws and regulations governing the conduct of lawyers. And, while the use of value-based fee arrangements will increase, the billable hour will not disappear. I believe, however, that it will no longer be the default billing mechanism that parties use without consideration of other approaches. 

As these changes take hold, ACC will continue to respond to in-house counsel needs and challenges in the coming year through our educational programs, member communications and advocacy efforts. If you have additional thoughts and predictions, I’d love to hear from you, too.

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