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In-house Access Insight & Commentary for In-House Counsel Worldwide

Choice of Counsel As Risk Management

Posted in Value & Innovation

Guest Blogger: Cheryl Solomon was the global general counsel of the Gucci Group, based in London, England, from 2004 to 2011.  She relocated to the San Francisco Bay Area in 2011 and is currently acting as general counsel to Kidlandia Inc., a technology start-up with its own cartoon characters (called Kreechurs) focused on providing deeply personalized games and social media experiences for kids.

The voice, views and stories expressed in this posting are of the author and do not necessarily reflect the positions, strategies or opinions of the author’s employer or ACC.

Part One of this article discussed the idea that the choice of which lawyer was going to handle a particular matter was as, if not more, important than alternative fee arrangements in terms of getting value for money. Part Two discusses how your selection of outside counsel provides you with an opportunity to showcase your ability to find the right lawyer for the right project at the right cost. It also provides a list of factors to consider when selecting outside counsel.

Choice of Counsel As Risk Management

As in-house counsel, our fundamental role is to help the company grow and develop, while maintaining an acceptable level of risk. Our choice of counsel should be part of how we accomplish that. If we choose the wrong lawyer, we may get the wrong advice, which would raise the risk level to an unacceptable level. Similarly, if we choose a lawyer whose bills are out of keeping with the nature of the matter, then we have also raised the risk level by increasing corporate costs beyond an acceptable level, which puts pressure on the company’s bottom line.

This is also an area where we can and should demonstrate our value to the company. If we do nothing more than go to the same outside counsel for every matter that we handle, and we let that outside counsel decide how to staff the matter, haven’t we abdicated our responsibility? Over time, the businesspeople could begin to wonder why they need us, if we’re nothing more than a conduit to the same outside lawyer who is the real decision-maker.

Instead, use this as an opportunity to demonstrate your value by giving careful thought to the appropriate lawyer for the matter and how to best address the level of risk. I give some suggested considerations below.

Analyzing the Matter In Order To Choose Counsel

There are a series of considerations that should go into choosing the correct lawyer for the matter, such as:

  • What jurisdictions are relevant to the matter? Is it solely contained in one country or state? Are multiple countries involved?
  • What court would you expect to be in if you ended up in court?
  • Are there particular complexities with that particular jurisdiction or jurisdictions? Can you rely upon the judicial system to adjudicate the matter in compliance with the law?
  • Do we need help from local counsel to understand the political dimensions of the jurisdiction?
  • What is the value of the matter? By this I mean what is the maximum liability or harm to the company if the matter does not turn out as expected.
  • Does the matter involve highly regulated areas such as, by way of example, securities, energy, or finance?
  • Could the company or its executives face real criminal liability?
  • How complex is the matter? Does it span multiple practice areas?

Analyzing Outside Counsel

In addition, to analyzing the matter, you should also analyze outside counsel to determine their capabilities. Particular considerations are:

  • Is the lawyer a specialist in the practice area involved?
  • Does the lawyer’s firm have the capability to handle other aspects of the matter, such as multi-jurisdictional or multi-disciplinary advice? Do you need that?
  • Does the lawyer herself handle the precise type of situation that the matter involves? An example is that the lawyer regularly handles employment discrimination claims but is not expert in executive compensation or union relations.
  • Have you worked with this lawyer before?
  • Have you received recommendations from other in-house lawyers about this lawyer?

An important consideration in choosing counsel is making sure that, as in-house counsel, we do not simply go for the “safe” option. There may be valid reasons to choose the “safe” option such as in a particularly complex or sensitive matter when everyone in the company needs to feel secure that you have the best advice that is possible. The important thing is to not reflexively choose the “safe” option but to choose the option that best fits the risk profile of the matter and matches the cost of the advice to the legal risk the company faces.

The more we demonstrate how we are adding value in terms of controlling costs and being thoughtful in our choice of outside counsel, the more we will become the true trusted advisor and business partner to the company.

  • Excellent tips on analyzing outside counsel. Agree it is important (and sometimes equally difficult) to identify specialists and/or past experience with similar matters. The internet and especially blogging have made this a little easier. We also believe that helping counsel identify the “right” questions to ask is beneficial to the process as well. Thanks for sharing.