Are your outside counsel guidelines working for or against you?

Susan Hackett
CEO of Legal Executive Leadership, LLC

Most in-house and outside counsel feel that their outside counsel retention guidelines and RFP processes don't do much to improve their inside/outside counsel relationships, even though both sides agree that both are very important and they spend large amounts of time on them. Why is this the case?

If you ask me, it's because most guidelines and RFP processes are very often written poorly, promote dysfunctional behavior, and are not developed to promote the purposes they were designed to address. So I thought I'd step into the morass and try to outline a few of the issues from my perspective and then offer some ideas for how folks might think about these processes differently. Hopefully this should help reunite the process with the value that these resources can/should provide to both firms and departments.

I'll treat the issue of retention guidelines first in this article, and will offer a separate piece in a future issue on RFPs.

(A bit of clarification: when I speak of outside counsel retention guidelines, I'm talking about the document issued by the law department that essentially provides the rules of the road for firms to follow and governs the operational business relationship between firms and the department. This includes the dos and the don'ts, general service expectations, etc., that apply to every firm relationship regardless of the specifics of the matter. This is not the document that includes pricing or staffing or timing, or process for the work to be done. These retention guidelines do not change from firm to firm or matter to matter. It is the document written by the department and regulating the firms.)

  • The most jaw-dropping outside counsel retention document guideline I ever saw was one issued by a large company/large department that was 327 pages long. The idea that anyone was conversant with what was in that document (on either side) or had any intention of either implementing or enforcing it (until they wanted to prove their point in an argument) is crazy.
  • Many guidelines are legacy documents, initially written in another day and time (which is completely divorced from the realities of today's relationships and goals) and constantly appended with 35 years of "Oh, yeah! Let's add that to the document" items. This creates a fantastic hodgepodge of stuff. These guidelines rarely reflect a cohesive, deliberate, and planned approach to modern relationships.
  • As a document written by corporate counsel, retention guidelines are a one-sided, one-way list of requirements or demands. Sure, the department owns its own business and relationships, and often these documents reflect the learnings of decades of relationships with firms. Further, departments have the right to issue whatever requirements they want. Goodness knows, many firms over the years have demonstrated repeatedly why departments need to issue 325-page documents to try to prevent the laundry list of abuses of relationship that many clients have endured (whether the result of intentional bad behavior or simple incompetence on the part of the firm). But it should be noted that a one-sided document in a relationship that is supposed to promote a partnership is not a governing document that will likely succeed in creating a win-win experience. It is like one hand clapping.
  • Finally, as lawyers, many law department leaders fashion their guidelines in a manner that is more consistent with a contract than one designed to promote a good relationship. The document doesn't provide guidance (remember, it's called a "guideline") as much as it proffers rules, and it rarely offers positive directions or resources that help people succeed in meeting the client's expectations. Rather it provides descriptions of what constitutes failure. It seems they're not intentioned to promote success, which is an opportunity missed.

Some folks, as a result, have gone to extremes: they've stopped issuing guidelines at all (suggesting that it is more important and useful for lawyers to actually have to talk about the way the relationship should run than send or receive a big impersonal rule book). And others have created guidelines (see, for instance, Jeff Carr's two-page "Covenant with Counsel ") that are a series of two-way pledges that the firms and the department make to insure the success of the retention; there's very little specificity and even fewer rules. The document is aspirational, rather than pedestrian.

But the danger of these alternate approaches – especially in larger departments where there are more people who may vary the approach or where there is significant turnover in either the department or the firms – is that there can be less consistency or comprehension. Plus there's the danger that folks will forgo those important scoping and defining conversations in the press of time.

I'd also argue that many guidelines promote exactly the opposite behaviors than they are intended to promote. Lawyers may look to follow the letter of the rule, rather than the spirit or intention of the document. Or because a massive document exists that is supposed to regulate the relationship, lawyers on both sides may forget or forego conversations that should be part of the start of any successful relationship. Once a document like a guideline is filed, it is often forgotten and gathers dust.

Further, because so many of these documents are so explicit, anything that is not covered, even if it violates common sense rules, can be seen as "well, they didn't tell us in the guidelines that we couldn't." Or worse yet, firms follow the rules exactly, but still miss the point of the retention; the rules only regulate business terms, and are not a replacement for substantive directions, or appropriate rates, or expected outcomes.

Many inside counsel have invested a lot in guidelines that aren't really guidelines at all. They are rulebooks. This means that in the world of real-life relationships, there is much that will slip between the cracks. Many opportunities will be missed to have had a meaningful conversation about what really should govern the relationship between a firm and a client that you can't pin down in a five- or 500-page document.

Clients who want to have a set of written guidelines should. They can be very important and helpful in creating some commonly understood foundations to the business relationship. But they should not be intended to replace the kinds of conversations that in-house lawyers should have with primary relationship firm leaders about expectations and accountability for performing the work the way the client wants it done – both in terms that govern all of the firms work for the client and on matter-by-matter assignments.

So check out some of the sample outside counsel guidelines out there and find some that work for you – do you want guidelines that set down rules? Or guidelines that describe the relationship as you want it to operate?

And most importantly, as a one-way document from inside to outside counsel, is there some way that you can create greater mutuality of interest in upholding and promoting the guidelines? Can you send them out to your primary firms and ask them to help you improve them so that they can not only succeed under them but be more proactive in owning their adherence in the firm? For members of ACC, there are libraries of sample guidelines you can review, and there are other resources out there for you to look at as you benchmark.

But perhaps the best review of your guidelines and suggestions for how they could be more successful might come from some of the very firms they're intended to "regulate." Why not invite them to be partners in your guidelines, so that you can prevent both sides from being victims of them?

About the author

Susan Hackett is the CEO of Legal Executive Leadership, LLC, a law practice management consulting firm she founded in 2011 after serving as the Senior Vice President and General Counsel of the Association of Corporate Counsel (ACC) for more than two decades. As an insider working with thousands of top corporate practice leaders, Susan has an amazing breadth of experience with the inner workings of in-house practice and the implementation of value-based legal models, as well as an international reputation for innovation, excellence, and success. Comments welcome to