Category: In-house

For those who are part of a legal department of 20 in-house lawyers or more, are regularly invited by their Managing Director/CEO for breakfast (to speak about the weather and soccer results), and for whom workload and cost pressure are foreign concepts, there is no need to read further. For all others, welcome to the In-house Club: A club of increased pressure and an increased workload with an increased scope of duties and scarce resources and budget. Welcome to the world of, as Richard Buckminster Fuller put it, “To do more and more with less and less until eventually you can do everything with nothing.” 

I’ll put the good news upfront: There is no need to retrain to become a pastor or firefighter (especially because as an in-house lawyer we are already both), or to fall into a serious depression. It is simply time for a new approach. Yes, it is an investment, but it will pay off in the long run. 

Changes Need Time

Changing your current way of working will take time – exactly what you feel you don’t have. It is like changing the tires of your car while driving on the highway. We are all somehow stuck in our “old” cycle of business (busyness), buried under urgent tasks and To-Do-Lists as long as the Great Wall of China. Hence, it is time to allow yourself room for change! My suggestions are that you: Block your calendar accordingly (in my view you will need four hours per week at least, and the best days to find this time are either Monday mornings or Friday mornings); Stop doing things which are a waste of time and only consume energy (for example, eliminate as many meetings and calls as possible and do not allow someone to steal your time by being late or unprepared); Keep your messages (including PowerPoint presentations) as short as possible; Try for a while to focus on only one or two communication channels instead of using all (eMail, Skype/ Lync, mobile phones, conventional phones, SMS, WhatsApp, etc.) simultaneously.

Collaboration Counts 

First, you are not alone on this journey (and you should not be). Find a Partner or a Coach – perhaps external to the company, though normally such people can be found within an organization/company as well. Potential partners/coaches may come from your company’s LEAN Champion (LEAN is a systematic management method, originating with the Toyota Production System, for eliminating of waste by concentrating on what adds value), if it has one, or someone in charge of Strategy, a Head of Finance, or even your CEO (this will also guarantee support for your activities companywide). Visit a conference (like the CEE Legal Matters General Counsel Summit) to get in touch with colleagues and learn from their experiences. 

You can also be your own coach, by introducing the concept to an objective observer. Split your personality in two, one representing your old self and the other one representing the objective observer. This sounds funny and needs some practice, but it really works. 

Further, communication is key! To increase understanding (as well as recognition) of your activities and preparation for the upcoming changes start to communicate your plans as early as possible, and make a point of involving your key-stakeholders.    

Make It SIF

“Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end” (Steve Jobs). 

Now, after you have created room for change (to clean your thinking) and set up your network of supporters, the tough work can start. Make it Simple, Make it Innovative, Make it Flexible (SIF) are nice buzzwords, but where should you start? In my experience, it all starts with an objective assessment of the status quo: The scope of duties, way of working (including tools, templates, processes, outside counsel set-up, budget, etc.), internal stakeholders, and needs and expectations, all grouped under main categories like Compliance, Contracting, Corporate, Counseling, Collaboration, and Costs. Having all these topics grouped and broken down you can start to ask: Is it Simple (e.g., do you have all contract templates and are they simple, do contracts use the same structure, are processes short and necessary, and do you have the right [number of] outside counsel engaged)? Is it Innovative (e.g., how do you communicate with your audience, and do you have self-service tools in place)? Is it Flexible (e.g., have you made templates for FAQs, do you have a clause library, do you train your colleagues regularly)? The outcome of this SIF-review should be reflected in an Assessment and Improvement Plan that you are able to implement. 

This is for sure only the beginning! There is much more to be discovered by “Doing Everything with Nothing.”

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In addition to hiring employees with appropriate education/work experience, finding employees with profiles indicating that they will be a good match for your legal team is a crucial factor in successful HR management and employee career development.  

Unlike big law firms, most in-house legal departments do not contain dozens of lawyers and legal assistants. For this reason alone, it is critical to choose the right people. The legal department tends to be an intersection of sorts for the traffic of all the other departments – and for successful risk mitigation and effective achievement of the company’s objectives, it should be. That is why the importance of staffing them not only with people of the desired level of education and work experience, but with colleagues whose profiles and personalities suggest that they will fit in well and make a valuable contribution, cannot be overstated. For it is true that a single person can affect the stability of a department and even the entire company, both positively and negatively.

Hiring new legal team members must therefore be a very careful and thought-through process, and the best way to make the right choices is having current legal team members assist the HR department in the selection. The whole story of a new colleague and the future of the legal team starts with recruitment. 

In Ahold, our legal team works very closely with our HR colleagues and we have established a successful mechanism of selection, as it is difficult even to imagine how we could hire a candidate with the right profile without bring personally involved in the process. What plays a role in the process – besides the breakdown of expectations and work experience, areas where our HR colleagues are certainly stronger than we are – are the “technical” skills required of the ideal candidate for a position in our legal team. These skills include communication skills and abilities, ways of thinking, problem solving abilities, and the candidate’s overall mind set. In my opinion, without underplaying the role of legal and psychological tests, a personal touch is irreplaceable. There must be direct personal contact from the very beginning. Either you find somebody with whom you are on the same wavelength and you quickly see and feel that your cooperation is likely to be smooth and successful, or you don’t. It’s the proverbial sixth sense that we’d better turn on and use if we hope to find an ideal candidate.  

In Ahold’s Legal Department, we do not focus our search on top specialists in a given area; rather, we look for strong personalities who are resourceful and flexible in handling their tasks, capable of effectively applying and reorienting their legal education and experience to the needs and workings of the company. They should be helpful to others and able to deal with legal solution requests in an efficient and practical manner. 

Most members of our team come from the legal profession and are members of the Bar. The Bar Exam and prior experience as an attorney certainly work in candidates’ favor. However, previous practice as an attorney brings with it certain impediments at the same time. For one thing, the attorney-client approach is different than the approach required of an in-house lawyer vis-a-vis an “internal” company client. That difference is large, and includes many elements, such as the manner of handling the agenda, communication, attitude, task efficiency evaluation, and the division of powers and responsibilities between the legal department and other departments in the company. Most of our colleagues struggled with this change of environment at the beginning of their time with us – a completely natural reaction.  

In addition, typically, an attorney in a law firm communicates with colleagues and partners and the assignments that he or she gets are clearly defined, with full documentation. The form in which the attorney processes her/her tasks conforms to the form preferred by the law firm he/she works for. The various assignments that the attorney handles are of appropriate levels of complexity and significance. 

This is rather different from in-house lawyers. Communication within a company is much more challenging than it is within a law firm, and although the Ahold Legal Team is directly subordinated to the Board, the team members still need to be in close and frequent contact with other employees and departments, including shops, as part of their day-to-day agenda. Frequently, they must handle urgent tasks where they are expected to set priorities, and sometimes even to clarify and determine what exactly is needed from them and how to process the task, striving always for effective and practical solutions. Also, they often encounter situations involving issues of overlapping or unclear authority. These aspects of the in-house environment usually take an attorney coming from a law firm by surprise and he or she must learn how to deal with them successfully. 

The question of motivation is considered frequently and extensively – but it is almost always described as having three basic component parts: (1) enthusiasm for and satisfaction with the work; (2) teamwork satisfaction and appreciation of the employer; and, last but not least, (3) appropriate rewards and benefits. 

The story of job satisfaction is never-ending as long as we work – but it always begins at the recruitment stage. To give a candidate a clear and honest account of the kind of work he or she will be doing and the company’s expectations of them is a key element of the interview – which is why it’s so important for us to be personally present there. 

Teamwork satisfaction, along with transparent and clear communication, is in the hands of the head of the department and his or her managerial know-how. The rules for communication he or she lays down have much to do with the team’s response and how the department is perceived by other departments in the company.  

The rewards and benefits reflect the economic power of the company, the relevant market standard and, naturally, the department’s results. This third component of motivation is very important, but – as perceived personally and confirmed by previous work experience – the first two parts, in combination, provides the foundation. 

Just as the head of the legal department should be there at the beginning – and be personally present at the candidate interviews – he or she should stick to two basic principles of effective, appropriate, and successful management of the legal department: to always know what is going on in the department and what tasks are being handled, and to trust the team. The “one for all and all for one” principle should absolutely apply here. The results of individual team members are the results of the legal department as a whole. No sophisticated management technical rules and reporting can replace personal, regular contact with team members and the building of a platform of trust. 

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Growing has never been easy. Think about your childhood, when during the night, you would feel pain in your legs without really understanding they were growing pains. The same thing happens when you start the journey of developing an in-house legal team. The key question is: How can we experience the growth together and start running towards to same goals as one unified team?

Knocking on the Door

The journey starts with hiring – a process where companies follow similar stages: Meeting with human resources colleagues, completing aptitude tests, presenting a business case, conducting reference checks, and having a grandfather interview. What is not very common but adds significant value is inviting current team members (who will be working with the candidate eventually hired) to the interview. If there is no other team member, colleagues from other functions may be invited to join the interview to test whether the candidate would fit into the organization. Either way, once peers or other colleagues become part of the interview, you have the opportunity to obtain more enriched feedback about the candidate from different angles, and the candidate has a chance to learn more about the team/work environment he or she is joining.

For the assessment part, if the candidate has only worked in a law firm and does not have any corporate experience, it would be useful to highlight the difference: To explain that nobody in the company outside the legal department has a legal background so the candidate – if hired – will need to translate complex technical legal jargon into simple, easy-to-understand language. There may be times that communicating in this manner may sound too basic, less grounded, and remote from the sophisticated legal opinions you would draft in a law firm, but delivering legal messages in a simple and short way may be the only way to ensure they resonate for non-legal colleagues. 

Further, as a lawyer in an in-house legal team, the candidate – if hired – will be part of all challenges and opportunities that the company is facing, leaving him/her without the ability to forget them the way they can be in a law firm after a legal opinion is sent to a client. Lawyers working in-house will need to come back to them the following day. It is therefore a must to strive to find solutions, innovate, and develop an adequate risk appetite. 

Becoming One Team

Congratulations, you hired a new member of the in-house legal team! Time to on-board that person quickly … but what does that mean, exactly? The on-boarding process should include an understanding of business (which may be sometimes left aside) as it fits among legal systems, compliance procedures, and counseling. An in-house lawyer is needed to provide services that cannot be provided by a law firm – and that can only happen by understanding business. But how then to increase this business understanding? 

In addition to traditional ways of understanding things like products, value chain, customers, stakeholders, and strategy, the best way I used was to expand my network of colleagues across different functions. Joining their meetings, asking about their current challenges, and – when approached for advice – using their language, all can create great collaboration. 

In parallel, how can we ensure that the new member is fully integrated into the in-house legal team? What I would value the most, as a new member of a team, would be the sense of belonging. Creating this requires that members know each other well (beware of allergies), have a shared identity (find a name for your team), clear strategy, and mission (where we are heading to) … and a little bit of tolerance (not always easy). 

What’s Next?

Now that the in-house legal team has been created and unified and a business understanding has been developed, what comes next? Often criticized for being impatient or hungrier for changes and promotions than previous generations, the younger workforce does not want to wait for five years to get additional responsibilities (and a nicer title). Still, I believe those with legal background are very lucky to explore new opportunities. 

Maybe the new members of the team will need to wait until the Head of Legal quits to be promoted to the role. But this is not the only option, and team members should be encouraged to think more broadly: Can they use their analytical thinking in creating commercial excellence and their experience in employment law issues in human resources for designing better performance management? Can they take the lead in quality and regulatory areas based on a deep understanding of sectorial requirements? Career development does not always need to be vertical; all different linear experiences can add more perspective. At the end, everyone is responsible for his or her own journey – let’s make it more colorful along the way! 

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The First Two: The Setup

It’s not the equivalent of announcing the discovery of a distant land to say there are two basic approaches in setting up an in-house legal function. The first is a more generalist approach, which works perfectly in companies which do not require very deep professional expertise in a particular area of practice on regular basis. Instead they require broad legal expertise across various areas. 

The second approach is to structure the legal function by practice. This is more common in bigger companies that can afford specialized professionals responsible for particular areas or practices.

If the company is not a law firm and is small, then it does not have many lawyers. A legal function is a cost rather than a revenue-generating function. Still, while the cost-saving role (which lawyers are usually proud of) is great, it definitely should not be the core of a business. Then the role of legal function involves addressing any legal issues that appear within the company’s activity: tax, regulation, litigation, labor, contractual, etc. Of course, the company may seek external professional advice when material risks arise and/or where internal experience or resources are insufficient.

Because bigger companies naturally have bigger risks (at least in terms of the amount of money at risk) they generally demand more professional solutions from their legal teams. As the majority of risks recur, many times hiring an in-house professional is more cost effective for a company than hiring a law firm.  

Of course there can be a combination of generalist and specializing approaches in a company.

The Second Two: Hiring

As a Legal Director you always have to find a balance between conserving costs and obtaining the best possible professionals for your team. When you hire a ready-to work professional, you might think that the job is done and you can sleep well. ideal candidates do not exist, however, and an adaptation or a shift of focus for a new employee can be required. In such cases re-training might be painful, and a candidate used to working in another environment may fail. By contrast, there are no such risks if you hire less experienced candidates, who may be more willing to learn and committed to following the career path. I personally feel satisfaction when I hire a less experienced lawyer who exceeds expectations and becomes professional in a short time. And I am sure that primary role of a head of legal is not to be the best in profession but to be able to set up a team of the best.

The Third Two: Training

On this subject there are no twos, and only a choice: To train or not to train. You may train your people, spend time, money, and energy, only to see the now well-trained person thank you and leave. Alternatively, you may not train your people and then face the risk that your team falls behind in this rapidly changing environment. There is no universal solution. If the company uses strong motivation tools and employees are happy to work not for money only, then training can bring a great value. Otherwise it can be waste of resources. 

The Fourth Two. Managing

I strongly believe that each person, at one point, makes his or her choice: To stay in his/her initial practice area and become a narrowly-specialized “know-everything” professional or to shift to management. A combination of the two is not possible. It is an angle of sight. Either you see deep or you see broad. If you are a specialized professional, be the best in your chosen area and constantly develop yourself to stay the best. If you are instead a manager, then delegate and motivate.

A manager is not allowed to do everything by himself – even things he can do better and faster than those he delegates it to. What can be delegated must be delegated. In this case the manager gains the ability to focus on more important tasks that cannot be delegated at the moment. Delegation also helps develop the professional abilities of subordinates and – maybe most importantly – it makes the system more sustainable by decreasing the dependence of the company from one person: you. 

The second primary aim of the manager is motivation. Although difficult to measure, everybody knows the difference in attitude and performance between highly motivated and unmotivated employees. If the company has a strong motivation policy, then you just need to follow it. But if not, then you need to motivate yourself and afterwards somehow motivate your team. Obviously, in this case you do not use material motivation tools like bonus, salary increases, or valuable gifts. Instead you need to use non-material motivational instruments: competition, public awards, and so on.

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Introduction

External counsel play an important role to an organization, when engaged. The value of their contribution depends upon their experience and expertise. Therefore, selection of external counsel needs to be done carefully. Their engagement in itself is not enough. Once selected, constant interaction with them is necessary to evaluate their performance. In this article, an attempt has been made to articulate how external counsel can be employed to the utmost benefit of an organization. 

Selection of External Counsels

The process by which external counsel is selected depends heavily upon the organizational culture of the company selecting it. Many companies have a panel system allowing it to store the details of external counsels. When a necessity arises, the panel is reviewed and depending upon the requirement the appropriate external counsel is chosen. 

Many organizations, however, do not maintain a panel of law firms to act as external counsel. Instead they simply look to make the best choice of external counsel for each particular job. Normally the details of external counsel and law firms are available online. Alternatively, word of mouth and reference-checking can be used to select names. These days reference books published by, for instance, Chambers and Partners are available to assist in the identification of external counsel in each particular jurisdiction. These books have details of specific industry sectors and the specialists available in those sectors. 

Selection through panel, study of websites, word of mouth, reference books, or even a combination of all of these sources have their advantages and disadvantages. A panel provides certainty and saves time – especially valuable where time is an issue. Panels are drawn on the basis of interviews to determine the strengths, expertise, and experience of the various service providers. However, there is a need to constantly upgrade the panel. 

Selection through other alternatives provides more flexibility to an organization, since it is not hamstrung with the legacy of a panel. External counsel can be selected based on specific requirements at a particular time. In making this selection, prior knowledge or word of mouth can be relied upon. However, a drawback is the time factor. Additionally, there is the requirement to negotiate fees, which can take up ever more time. 

My organization does not have a panel. Depending upon the nature of an assignment, I engage law firms around the world on a regular basis. In doing this, I depend primarily on prior knowledge, networking, and word of mouth. Indeed, I have a list of external counsels in different locations around the world with contact details to facilitate quicker decision-making. The flexibility that this system provides is the availability of multiple options and flexibility in the negotiation of fees. 

When selecting the external service provider, cultural background needs to be kept in mind to ensure smooth interaction between the parties. 

Managing Counsel

It is critically important that the relationship between the legal department and the external counsel/law firm is based on inter-dependence and mutual respect. For an external counsel to be successful, he has to be provided with full information, facts, and dynamics of business so that he can add value to his assignment. Conversely, the external counsel should have the capacity to understand clearly the requirements of the client and the client’s commercial necessities. This will help the counsel to provide valued advice to the satisfaction of the client. In my experience many external counsels lack this important quality. Knowledge of both facts and law are essential. Knowing facts is the starting point, understanding business realities is the next criteria, and application of law/legal knowledge to achieve the objective of the client should be the outcome. I have engaged law firms who were good at theory but not on practicalities. Many times they did not understand the commercial necessities/compulsions of the client. On the other hand, there are external counsels who are capable enough to understand the business requirements and give their advice accordingly. This pleases the client. 

Evaluating Performance

As discussed before, the external counsel has to work in tandem with the organization that engages it. In my view, the counsel should become an extended arm of the legal department of the engaging organization. From the organization’s perspective, at the very beginning, it is important to identify the lawyers that will be involved in the assignment. Similarly, the lawyers should know who will be their interface at the organization. While the General Counsel usually acts as the interface, if the assignment is complex and commercial or technology driven, then the General Counsel may need to bring in other colleagues. This is required to provide a platform for an interface between the external counsel and the client for better understanding of the assigned tasks. Constant dialogue between the two sides is essential to help the external counsel satisfy the client’s needs. 

I firmly believe that development of good chemistry between the external counsel and the General Counsel is the starting point of the relationship. In the many complex projects involving billions of dollars of investments that I normally deal with, healthy and friendly exchanges between the external counsel and our organization are essential for the productive outcome of the matter. Evaluating performance becomes easier if the right person is selected at the right time for the right price. Evaluation does not have to be done at the end of the assignment. Rather, evaluation and monitoring go hand-in-hand, and if controlled from the beginning, can produce wonderful results. 

Monitoring Counsel’s Work

In my experience, monitoring the counsel’s work consists of providing the right information at the appropriate time with clear directions. The last of these is key. Many times I have seen that our counsel’s performance suffer for lack of information. Having said that, it must also be noted that the right questions were not asked by the external counsel, which created a sense of frustration between the parties. Constant dialogue is essential to avoid this kind of situation. 

Maintaining a timeline is also very important – even more so when the whole assignment is time bound like M&A. Maintaining the timeline is possible, especially in a time bound deal, only through constant interaction between the parties. This is a complex task, especially when the deal involves multiple jurisdictions on different continents and geographical timelines. However, in today’s technological age, communication at almost any time and any place is possible through video conferencing, skype, and so on. The good old days of face-to-face negotiations can be dispensed with most of the time. And parties can sign technologically, with actual hard copy signatures to follow. This works well if there is a complete understanding between the external counsel and the General Counsel and the rest of the organization about the timelines, tasks involved, and responsibility/accountability of concerned persons. I normally ask for the identities of people at external service provider who will play key roles, including backup. Holding regular conference calls and video conferencing apart from physical meetings is also essential to maintaining contact between the external counsel and the organization. 

Fixing Fees

Fixing fees is quite tricky, as it defies any hard and fast rule in today’s market. It is the market pull and push that determines the fee. There is no fixed template which can be used for fee fixation. These days, when selecting law firms around the world, I normally go for a fixed fee with an understanding between the parties as to what the expectations and deliverables are.  Where it is not possible to fix milestone-based fixed fees, then some kind of combined fixed and flexible fee models can be arrived at. These days hourly fees are very rarely agreed to – in fact they are being dispensed with. For fixing fees, the most important criterion is determining the scope of work at the beginning of the engagement itself. If the scope of work moves, then it is possible to re-fix the fee. In a recent long-term multi-billion-dollar project being pursued by my organization, a fixed fee at different milestones over a period of five years or so was set, which is a classic example of good understanding and relationship between the external service provider and the organization. 

Conclusions

It is clear that engaging, managing, and evaluating the performance of the external service provider is like maintaining a good relationship. Ultimately it is the trust and confidence of each party in the other that matters. The relationship cannot be based on finding faults with each other. If the best is to be exerted from the external legal counsel, it is vital that both parties understand the requirements of the other clearly and interact with each other positively so that the client’s objectives are satisfactorily fulfilled.

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

After working for over ten years in a large international law firm in the United States and another six years in an in-house capacity in Austria I have come to the conclusion that the team you create is the key to your success as a leader. No matter how smart, talented, driven or passionate you may be as a general counsel, the success of your legal department depends in a large part to a strong and motivated team that works well together in accomplishing the tasks and goals that come along.

While cost-cutting is paramount in many organizations, no large company will be able to thrive without having a strong legal department. Investing in and maintaining the in-house legal team will reduce legal risks, contribute to the business’s general success, and ultimately reduce external legal costs. Thus, we must consider how one builds this strong legal team. 

My experience has led me to believe that building an effective legal department rests on four pillars: (a) Being judicious in selecting a one’s employees; (b) Giving team members freedom in how they do their work; (c) Being appreciative of everyone’s contributions; and (4) Being a good role model. 

Be careful in who you pick to join the team. I have learned that choosing individuals who possess a similar work ethic is of great importance, and I have found it very helpful to have existing members of my team – in particular my deputy – participate in the hiring process. Getting their views on how they think a new member may fit into the existing team is indispensible. 

The second pillar of a strong legal team is freedom/trust. When I worked in an international law firm as an outside counsel to large corporations I appreciated the freedom I was given by my bosses to do my tasks. None of the partners of my law firm micromanaged me. Their primary concern was the result I delivered. After going in-house I discovered that micromanagement was often the norm. Subsequently, after taking on the role as general counsel, I made trust and freedom the guiding values of the legal team. Consequently, with the increasing demand for in-house lawyers to be available and reachable at all times, I believe that more flexible work arrangements should be available. While this may not be true for every business department, legal departments are functioning more and more as in-house “law firms” serving and supporting all business units in a company. Its employees should have the freedom to arrange their work day and/or environment more freely, especially as workers that are trusted and given more freedom are more productive and happier. 

The third pillar is building a team where everyone’s contribution is appreciated. There are many administrative tasks (record keeping, archiving, maintaining and updating databases, etc.) that need to be dealt with on a daily basis. This work is as important to the success of the legal department as doing legal research or writing legal memoranda. Also, this is the type of work that cannot be really outsourced. I have learned that it is imperative for me to respect the members of the legal team that perform paralegal tasks and to encourage the attorneys to value these tasks as an essential part. 

The final pillar of a strong legal team is the GC herself. She should not demand more from her employees than she demands from herself. Do not expect your employees to be high performing if you do not live up to these expectations yourself. The competence of the GC serves as a standard for the legal team. Thus, if the GC is smart, hard working, and ethical, the legal team will have a standard to uphold. 

Currently my big challenge is maintaining a strong legal team in light of the fact that the company we are working for will be liquidated in the near future. HETA Asset Resolution is a wind-down company owned by the Republic of Austria. Its statutory task is to dispose of the non-performing portion of Hypo Alpe Adria Bank, nationalized in 2009, as effectively as possible while preserving value. The more successful the employees of HETA are, the more quickly they are going to lose their jobs. Nevertheless, as the wind-down progresses the more legally complex the situation becomes (i.e., assets remaining to be sold are often subject to complex disputes, subsidiaries cannot be liquidated because they are still involved in numerous litigations, etc.). 

In light of our situation I have found it crucial to maintain a motivated and effective in-house legal team committed to actively trying to resolve these issues. The four pillars which I have described above have helped me develop and nurture such a team to facilitate my company’s goals during its wind-down process. 

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Selecting a law firm seems easy: For large transactions, you choose large international law firms. For less important cases, you may opt for smaller, specialized firms. However, assessing their work may be more difficult. 

Ghelamco – the company I work for – is a real estate developer which delivers large investment projects, especially office ones. Every development project has a long life-cycle, with multiple milestones. The project starts with purchasing the land. Then we need to obtain permits necessary to start the construction process. Afterwards, agreements with contractors are signed. As the next stage, we sign agreements with tenants and ensure financing for the building. Finally, we prepare the ready and leased building for sale. 

As head of the Ghelamco legal department, I am responsible for every part of that project life-cycle. The signed agreements vary in terms of complexity and value. Sometimes they involve small amounts, but other times we sign contracts worth hundreds of millions of euros. The agreements are signed both with local partners and international companies such as banks, investment funds, and global corporations. 

Depending on the case, we hire various kinds of law firms – both small and large. And in some investments, we cooperate with many firms. For example, with our flagship project Warsaw Spire (109 thousand square meters of office space; three buildings plus a large public space), the project has been going on for more than 10 years now. For this project, we have used nearly 15 law firms, including large, international firms as well as smaller expert firms (engaged mainly to issue opinions). The work on this project is still continuing as the final lease agreements are being concluded and the project is being prepared for sale. 

Ultimately, the choice of firm depends on the quantity and complexity of the matter. We use a simple rule here: The more complex, time- and work-consuming the issue, and the more often a quick response will be required, the bigger the law firm must be. 

Of course, the choice of a law firm also depends on costs. If the case involves a large-sum transaction, we can afford to hire a large international firm. 

The essential thing is to assess the quality of the services provided. And this may be a challenge. Therefore, law firms should pay attention to several extremely important aspects of cooperation. Failure to take them into account may result in losing a client.  

First of all, law firms should know in detail the character of their client’s business. To ensure familiarity with our business, for example, for the most complicated cases we often use the services of the same, proven firms, because from the first day of the cooperation we want to be sure that the firm knows both our industry and our company. 

Second, law firms should care about their employees. This directly follows from the first item. The firm’s staff is very important. Legal support involves human work and a lot depends on relationships between people. Losing a team may have a direct impact on whether the firm is chosen or not. In the case of Warsaw Spire, for instance, one of the law firms working for us experienced considerable personnel change. As a result, we ended the cooperation. 

Here again, I would like to emphasize how important it is for a firm to know the character of the project and the company the firm works for. Therefore, for a law firm, it is essential to retain the best talent. At the end of the day, it is the human being and their knowledge and skills which really matter. I often say “I stand with the lawyer,” regardless of what firm he or she works for.

Third, sometimes the back office and resources matter as well. This concerns mainly large and complicated transactions, such as selling an entire building. In such a case, a good reputation is what matters, but also the firm’s headcount, since the choice depends on the firm’s organizational capabilities. For large transactions, we have no choice but to hire a law firm with a big team and proven standards and procedures. 

Finally, and most importantly, quality and attention to detail matter. The longer I work – and I worked more than ten years as a lawyer in an international law firm before working for the last nine as head of an in-house legal department – the more mistakes I see made by law firms. From the perspective of the head of legal department, these mistakes are very irritating. And I don’t mean the big, serious, obvious ones. The most irritating ones are minor errors in documents: misspellings, language mistakes, minor shortcomings. From the client’s perspective, this is unacceptable. In return for paying large legal fees, clients expect top quality. If, as head of a legal department, I am able to identify errors in documents prepared by a third-party law firm, it does not look good. 

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Throughout my career I have worked at small legal departments (and by that I mean departments with fewer than five people – small at least by Greek standards). They have their own characteristics and challenges. In my experience, they tend to rely heavily on the advice of external counsel, who often becomes a true partner of the in-house attorneys. This reliance becomes more pronounced when in-house counsel has to manage tasks across different jurisdictions. In those cases, engaging external counsel becomes indispensable. 

Having managed more than 40 outside counsel across the world, here are my insights on how to select and manage them, and how to evaluate their performance: 

Selecting Outside Counsel

“The beginning is half of everything,” Pythagoras said. This saying also holds for the selection of the right outside counsel: When done correctly, it is likely that the relationship between the company and the law firm will be a good and fruitful one. 

There are several approaches for hiring external counsel and one size certainly does not fit all. The approach that has worked best in my experience is referrals. Working with referrals seems not to be in line with the latest tendencies on metrics and cost-benefits analyses. It can, however, be very efficient when you ask a trusted outside counsel who knows the business and the style of your company for a referral in another country or even in another practice area. The referee typically knows the law firm profile sought by the company and advises accordingly. Further, this method is especially convenient when time is of the essence and you need to appoint appropriate external counsel on very short notice.

Through referrals, it is easier to identify boutique firms that perhaps do not get much exposure online, but tend to give practical, value-for-money advice and are very conscious of a client’s budgetary constraints. 

Having said that, when dealing with a jurisdiction for the first time, legal directories such as Legal 500 and Chambers and Partners can also be very helpful. 

While a small legal department may not have the resources and tools to set up a formal Request for Proposals process, beauty contests can be very effective, particularly in terms of the budget, when it comes to a large task like a major corporate transaction or important litigation. A topical example is the preparation for the General Data Protection Directive, where we will be using this RFP approach. 

Managing Outside Counsel 

Again, small legal departments do not as a rule have access to technological case management and tracking tools. Instead, where such oversight is necessary, in-house counsel can apply some classic principles. 

For a relationship to grow and be mutually beneficial, it is very important to make expectations from external counsel clear from the outset. First, the general frame of the relationship should be set. As the external counsel will send an engagement letter with general terms and conditions, it is useful for the in-house counsel to share their own guidelines and processes for outside counsel and emphasize any matter that is especially important to then, whether related to billing, conflicts of interest, or anything else.

Once this process is complete, the parties can move forward with specific tasks. In my experience, the clearer and more precise the particular brief to outside counsel is, the better they will understand what is needed of them and the happier the in-house counsel will be with the results. This requires, of course, hands-on management by in-house counsel, including a careful review of any memos, availability to clarify any questions, and provision of feedback. I have found that the more a legal department works with external counsel, the less input and guidance the latter will need when handling a task. This is one of the great advantages of forging a strong relationship with outside counsel. 

Of course, external counsel should not be put under such pressure that he/she is unable to act. Frequent updates are essential and feedback from the legal department on specific items will always be needed, but micro-management from the in-house counsel’s side is always a sign that outside counsel’s performance is not ideal. 

Evaluating the Performance of Outside Counsel

As noted above, a small legal department will likely lack the tools for streamlining the assessment of law firms so will need to employ more intuitive and organic processes. Either way, evaluating the performance of outside counsel will come down to two key factors: results and billing. Each company is different and each in-house attorney values different aspects of a firm’s performance. Nevertheless, all legal departments appreciate practical, hands-on advice that is delivered promptly. When such advice is accompanied by reasonable fees that are within the initial estimate or budget, then that’s an ideal situation. 

Two other factors that can make or break a long-term relationship are responsiveness/communication and personal chemistry. This latter consideration, which is far removed from analytics and metrics and corresponds to the human part of a professional relationship, comes into play only when the three first criteria are fulfilled. 

Essentially, all of the above translate to trust, which is, in my view, the cornerstone of the partnership between in-house and outside counsel.  

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Nowadays, in many countries, the demand for legal outsourcing is increasing in response to the rapid development of certain business activities, and the necessity to hire an external consultant can arise in a company of any scale, status, and activity, whether an in-house lawyer is present or not.

Often, mandating an external consultant enables a company to obtain additional work resources quickly, provide legal support for unusual tasks and projects, and to obtain a look “from the outside” at its internal processes.

Throughout my career, I have been both an in-house lawyer and an external consultant for many companies, and as a result I can say that the parties are not always satisfied with the result of work performed by an external consultant on a project or task for which he/she has been retained, and the relationship does not always result in further efficient cooperation.

In my practice, I have seen relationships with outside lawyers turn so negative that even before the end of formal cooperation we all knew that we would never return to him again.

Choosing an external consultant (and this may be an independent consultant, attorney, lawyer, or a law firm with a team of lawyers and attorneys) is a very important decision. In my opinion, the right choice of an external consultant is 50% of the success of further fruitful cooperation.

So, when choosing an external consultant, we can use the following criteria:

1. The Purpose of Attracting an External Consultant

In order not to make a mistake in choosing an external consultant and to instruct him/her correctly, the company must clearly define the goal for which the external resource is attracted, what the expected result of the cooperation is, and what the key conditions that must be observed are (for example, applicable mandatory deadlines, and so on).

2. External Consultant’s Reputation

The external consultant’s reputation is of great importance not only in terms of the consultant’s professional competence, but also in terms of the risk of confidential information about the company’s internal processes leaking. For an external consultant, reputation is the main asset and, as a rule, outsourcing companies (including law firms) cherish their reputation and can’t afford to lose the client’s trust.

3. Availability of Recommendations for the External Consultant

When searching and selecting an external consultant, various sources can be used, including websites of legal companies and other legal portals and recommendations from partners or others who have had positive experiences with a certain external consultant.

I think that the best advertising for an external consultant, and in particular a lawyer, is the recommendation of another client, who was pleased with the services rendered to him. However, one should not blindly trust such recommendations, since the lawyer being considered may be a very good specialist in the field relevant to the person who recommended him/her to you (for example, in contract law) but may not have the necessary experience in the sphere of law relevant for you. Hence we have the following criterion.

4. Specialization of External Consultant

It is very important that the consultant or law firm has experience in the sphere in which you have a question or need for assistance. Also, if a law firm is recommended to you for a particular field of activity, make sure that the lawyers who will work with you on behalf of this law firm are – if not the same ones that worked with the source of the referral – at least of the same professional level.

The cost of services, in my opinion, is not fundamental when choosing an external consultant. The only point that should be taken into account when discussing the payment for a consultant’s work is the ability to pay in stages, based on the amount of work performed.

In order to be able to influence the progress of the external consultant’s work, at least two conditions must be met.

a. Consolidation of All Conditions of Cooperation in the Contract

Once you have made your choice of an external consultant, it is important to discuss, approve, and consolidate all the conditions and nuances of the cooperation.

The instrument of consolidation of all agreements, in this case, is a contract signed with an external consultant.

A detailed discussion of the conditions that are of fundamental importance for the company, a detailed description of the desired result, terms, and essential conditions of cooperation in the contract will provide an opportunity to control the process of implementing the task by the external consultant.

Every lawyer knows that in order to appeal any of the terms of a preliminary agreement, it is necessary to set out these agreements in detail in the final contract. The same rule can be applied to external consultants. It is necessary to discuss everything and include it in detail in the contract, as well as to provide responsibility for violation of the terms and conditions of the signed agreement in the future. It is necessary to do this even if the consultant comes strongly recommended or if the task for which the consultant is retained seems to be elementary.

b. Interaction of the External Consultant with a Company Representative

Often, if the company has a lawyer in-house, this lawyer interacts with the external consultant at all stages of cooperation. In the absence of an in-house lawyer, such a contact person may be for example, the project manager responsible for the tasks for which the external consultant had been retained. This interaction is extremely important, since only the internal representative of the company knows the company’s needs and can, in the process of implementing the project, identify any problems in the services rendered by the consultant.

Some of the aspects that need to be paid attention to in the process of cooperation with an external consultant, as well as in the evaluation of the external consultant’s performance, are:

• the external consultant’s promptness (or lack thereof) in to the company’s requests or in achieving the objectives;
• the external consultant’s attention to (or inattention to) details and nuances when rendering services;
• the external consultant’s observance (or failure to observe) the confidentiality of client information;
• any potential existence of conflicts of interest that may exist (for example, between the external consultant and other clients);
• the external consultant’s regular communication (or failure to communicate regularly) about the progress of the task or project;
• the appropriateness (or unjustified nature) of bills submitted by the external consultant for services rendered.

Of course, one of the key criteria for evaluating an external consultant is his/her achieving the result stipulated by the parties in the contract, compliance with the deadlines for the provision of services, and the absence of costs for the company not stipulated in the contract.

The right choice of an external consultant, the detailed consolidation of all the essential conditions for the company in the contract, correct task-setting for the external consultant, and regular interaction of the company representative with the external consultant at all stages will ensure fruitful and comfortable cooperation for both parties.

In our company’s activities, as well as in my personal practical legal experience, there are a number of examples of fruitful cooperation with external lawyers and law firms. And the observance of all the conditions that I described above has allowed us to cooperate successfully and long-term with external consultants, in particular on cross-border matters and in the support and structuring of investment rounds. 

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The process of selecting external counsels is quite a challenge to management of an-house legal department and poses unavoidable risks. It has an important effect on the department’s relations with its internal clients and with executive management team members. It is a pity that in some cases this picture may be explained as “The cobbler’s children have no shoes.” The risks inherent in selecting external counsel may in the worst case trigger the chief legal counsel’s professional liability and even directors and officer’s liability when not managed and regulated properly. Accordingly, it is essential to review the specific terms to be applied while selecting the External Counsels (ECs). It is essential to perform conflict checks, review the EC’s market expertise, and analyze the EC’s relation with public authorities when selecting an EC, as is setting out key performance indicators in legal services agreements.  

To ensure consistency in law firm relationships and to implement best practices with invoice submission and payments there should be a written process and guidelines for General Counsels (GCs) when selecting External Counsels. The most common and necessary criteria may be summarized as: conflict of interest, confidentiality, and neutrality. 

Professional experience and market expertise are always keys to identifying the best option for our companies, with price on the other pan of the scale. 

A very specific and simple legal services agreement covering Key Performance Indicators and specific expectations from the EC is another key point which might be a challenge. External Counsel may propose their own terms, which they have created. However, they need to be flexible and these terms should be designed according to their clients’ needs, and more importantly, provide confidence to GCs that they will obtain the best results. Communication and reporting should also be regulated and cannot be left to the normal course of business when designing the relationship. Designating a relationship partner to take responsibility for overseeing the adherence to these guidelines and designating a member of the legal department as our relationship manager with the EC has been quite useful and is recommended. 

Conflicts

Large, diversified corporations consisting of many operating companies which do or have done business at multiple locations/business lines under separate and distinct names may incur different kinds of conflict of interest risks. They may be working with the same EC’s as opposing parties and this may not be seen from the surface. A preliminary conflict check is highly recommended in this context, and where any conflict arises, it must be promptly brought to the attention of the legal department. 

A common issue that we have experienced in selecting external counsel in developing countries is seeing them attempt to win clients by exploiting relationships with executive management team members whom they know socially. This can generate a big and serious conflict of interest problem, in part by weakening the General Counsel’s position and his/her relation with outside counsels. Thus it is essential to review the existing relations periodically for compliance purposes.

Evaluating Performance 

From time to time hours which have been charged by an EC may not be reasonable or may be higher than expected. In addition more than one counsel may be working on the same file and double/triple charging may occur, which demotivates our relationship. Your file may be your most important project – but this may not be the same for the EC who is serving for several clients, and you may be served memos or legal opinions prepared by junior counsels – and this also harms the relationship. Therefore it is essential to keep an eye on the content of work being done and legal costs and to inform the EC of any unexpected costs or other sources of disappointment. Hence we know they are always keen on finding solutions.  

No Need to Be Too Conservative

GCs and legal departments should also review their substantive legal practices and operational needs and consider whether some of the work they have been outsourcing to ECs can be performed by lower-skilled internal resources. Billing arrangements and frequency, time-recording details should also be agreed in the agreement to avoid additional costs and legal budgeting purposes. There may be variable billing strategies available and putting gaps may also be helpful in managing costs.

We Are In the Same Boat

EC’s are by all means our business partners. We should also treat them, through supportive actions, such that “we are all in this together.” This will result in improved responsiveness, easier issue and deal negotiation, risk sharing, and co-investment, and this will empower GCs and the legal function’s position.

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.