The Joy Of Secs (secondments)

22 09 2011

I’ve been hanging out with a lot of in-house counsel recently, and one thing’s clear.

They love their secondees.

Really love them.

The working environment on secondment wasn't quite what senior corporate associate Sarah was expecting

Whether it’s a GC who is relying on a specialist skill set that he or she can’t quite find the budget to recruit, a mid-level corporate counsel who is working with a junior lawyer from private practice who helps with the “heavy lifting” on a big deal, or a small in-house team that find having a secondee gives them much broader access to their external law firm’s resources than their usual interaction – the sentiment is unanimous.

For law firms, secondments offer some incredible benefits too. Time and time again, clients point to knowledge of THEIR business as a critical factor in selecting their external lawyers. The insight secondees getting living and breathing in that environment can’t be gained from market research or reading up on the company. Plus, alongside the knowledge of how a client works, their culture, their pain points comes the opportunity to build broader and deeper relationships – not just with the in-house teams, but with their internal clients too.

Where a secondment programme has a rolling element (whether trainees or more experienced lawyers) and the firm puts in a continuous series of lawyers over time (for example a change every six months), this can build an incredibly strong connection over time between firm and corporate team and build a powerful competitive advantage for an incumbent law firm.

Outside of the particular secondment relationship, lawyers often return to private practice with a broader skill set and a better understanding of clients at a more general level, and are much better placed to empathise with the in-house community as a result. Plus in-house experience, even at a secondment level, really does does count when pitching for work with corporate counsel.

So it’s all sunshine and light?

Hell, let’s try and stick everyone on secondment and then we’ll never lose a client. Right?

Alas, it’s not quite that simple.

The major challenge law firms face is economics.

The basic premise of a secondment being that if a client has enough of the right type of work (generally consistent in terms of volume, skill and experience required), but not enough to make permanent recruitment an option, then taking a single lawyer on secondment will be cheaper than paying for that resource on an hourly rate basis. In return the law firm gets guaranteed utilisation of the lawyer, a degree of certainty of revenue and predictable cash flow.

But the world has changed. Because the competitive intensity in the legal market is increasing rapidly, and because firms have wised up to the broader benefits of secondments (set out above), the price that in-house teams have had to pay for a secondee has fallen rapidly.

As the economy tightened, putting secondees in “at cost” became more prevalent. At a superficial level, this again made sense – with firms restructuring and struggling to find work to keep all their lawyers busy (and therefore employed), farming them out to clients allowed them to retain their good people while keeping clients happy.

But in reality, often the exercise often ended up costing the firms more than they anticipated. Questions arose to what “at cost” actually meant. Was it salary cost (and if so did that include benefits, bonus etc)? What about a proportion of overheads (often asked as the finance director walked past the secondee’s empty desk in an expensive City location)? Who picked up the tab for the upgraded laptop that was required to get on the client’s network? What about the opportunity cost when another project turned up unexpectedly and the firm was struggling for a particular resource profile to do the work efficiently?

As the requests for secondments increased, difficult decisions had to be made – who can we say “no” to? If we say “no” will another panel firm put someone in? Is it an investment rather than a revenue stream, and if so, how do we calculate the return on that investment?

Competition for resource within firms, already fraught with politics in many cases, heightened.

The pressure on resources is made worse still when a secondee doesn’t return (not as sinister as it sounds!). Two common outcomes are that the secondee “goes native” and is simply recruited by the client. If the relationship with the law firm is financially material, the firm will have limited ability to negotiate any form of compensation, irrespective of terms in the engagement letter. The other alternative is that the secondee gets a taste for in-house life, and after returning to the law firm simply finds another job with a corporate legal team as quickly as possible.

Speaking from experience, while I had already decided that an in-house role  was probably the next move for me, three months I spent on secondment a year before I made that move did help to crystallise my thinking when the time was right to make the change.

Another challenge is for longer term secondments, how does the law firm effectively keep the connection with the secondee? I’ve seen this challenge at several levels – from the junior associate living out of a hotel for nine months, disconnected from her peers and far from her family, to the partner slowly becoming marginalised in the partnership and losing the emotional connection to the mothership.

Pros and cons.

Swings and roundabouts.

To my mind however the overall value equation is clear. If the engagement is structured well, the economics thought through and the fit between secondee skill set, personality and appetite with the in-house team’s culture and need is good, a secondment is a winner every time. The key is not to assume every secondment fits this model and to put the time in up front to get to a working relationship rather than to simply react and throw resource in at every opportunity that comes along.

Happy seconding.





The in-house law firm – the future of corporate law departments?

20 07 2011

I’m a big fan of Tom Peters. Not just because he genuinely interacts with his followers on Twitter, not just because he’s passionate about what he writes about, and not just because he presents (presentations, books) in some pretty cool ways. I’m a fan because he has some great ideas.

Corporate counsel Sedgwick took his boss' advice to "be a rock star" seriously as he began to address the board meeting

If you look back to his book “Re-imagine, business excellence in a disruptive age”, which was written nearly a decade ago, so much of it remains fresh and inspiring (and you should buy a copy if you’ve not seen it – it was required reading by my General Counsel when I was an in-house lawyer!).

But there’s one concept, right at the heart of the book, that seems more appropriate than ever in the legal marketplace right now. Tom describes the principle as “From cost centre to stardom – the professional service firm (PSF) transformation”.

Let me outline some of the detail behind this principle, and then I’ll tell you why I think it’s SO relevant right now.

Tom starts by ranting (his words!) that aiming to improve departmental efficiency and effectiveness is no longer enough. Heard about effectiveness and efficiency in the context of corporate law departments recently? It’s the opening paragraph of pretty much every report about General Counsel these days. Hell, I’ve written about it myself!

He goes on to assert that working 50 hour weeks in a cost centre is not sustainable – rote work will be outsourced  and the core that remains will be the traditional domain of the PSF – the accumulation and application of creative intellectual capital. With the amount of publicity the legal process outsourcing business is getting these days, this shouldn’t seem far fetched for General Counsel either.

So what’s the solution? Tom breaks it down into the following four key parts, to which I’ve added a law department spin.

  1. Outsource it – if the work can’t be done economically or the law department isn’t demonstrably great at it, outsource it.
  2. Now in a legal department this might be “volume work” which can be systemised and done off-shore cheaply, or it might be more complex but the legal team doesn’t have the skills in-house to do a great job, in which case the work might be passed to a retained law firm (or even another internal department).
  3. Productise it – if the work can be done in-house, break it into a “product” that someone will pay for. Now for lawyers care needs to be taken here as while there are certainly plenty of tasks that internal clients will pay for (doing deals, litigating etc), there are some jobs where the key beneficiaries may be the shareholders who won’t have a notional budget to cross-charge. The key point to me however is that the work creates real, demonstrable value for the organisation.
  4. Web-ify it – Tom challenges us to put everything (policies, procedures, contracts) on the web. Now many lawyers will no doubt be holding up their hands in horror here, but the reality is that this concept is already starting to take hold in the more progressive corporate legal departments. Use up a lot of bandwidth drafting standard sales contracts for the business? Take instructions, do a first draft, internal client reviews and makes changes, lawyer reviews changes, lawyer clarifies, lawyer redrafts, internal client reviews….. you get the picture. How much time has that taken? What’s the internal client satisfaction score looking like? Never mind that of the lawyer or the external client. By contrast, how about this – automate the document, internal client follows online guidance and prepares good quality first draft, lawyer reviews and amends, internal client sends document out.
  5. If it’s great, celebrate it. This to me has two important themes. The first is about communicating value to the business. There are plenty of legal departments that are really good at this, and are highly valued by their business colleagues. But there are plenty who don’t communicate success and value, and in my view they need to start. The second theme Tom mentions is more interesting – if an in-house legal team can become genuinely world class, could they start to provide services outside their company?
This is the idea that got me starting thinking about this topic.
With the Legal Services Act allowing non-lawyer ownership of law firms, is it conceivable that some in-house teams might think of converting to a law firm?
At a recent conference for in-house lawyers, the very progressive GC of a company with a global brand indicated that he was thinking using this type of framework to provide legal services to the company franchisees. Another GC joined the debate and floated the idea of pooling compliance resources with other companies in the industry – sharing the overhead for work that was mandatory but provided the company with little competitive advantage.
This is a time when radical thinking is possible. Sure, there are undoubtedly regulatory questions to answer, and professional ethics issues to resolve, but what is clear is that the future can look very different.
The obvious question is how this might it affect your legal team? Tom talks about “Exciting [legal] departments selling their creative services far beyond the company’s border”.
The more interesting question is how might it affect law firms? Will they find themselves competing with their clients? What about collaboration opportunities.

As Tom would say – to improve is not enough, now is the time to transform.





The five skills of highly effective in-house lawyers

8 07 2011

I spent some time this week with a group of in-house lawyers facilitating a discussion around the skills and capabilities that corporate counsel need to be a success, particularly if they are just making the transition from private practice.

The advanced finance for lawyers class was not well attended

The group itself was very diverse, ranging from a FTSE100 GC to a very recent convert to in-house life, after six years at a magic circle firm. However, despite this diversity, a number of key messages shone through. These are the skills that you need to learn to make it in-house, and very few are taught comprehensively in law firms, fewer still during academic training. 

I’ve hacked, shortened, edited and distilled further to come up with the following magic formula…. 

1. It’s all about the business stupid!

At the heart of everything, is a genuine understanding of their own business. Plenty of private practice lawyers talk a good game about being commercial (and to be fair, some of them do have an excellent grasp of their clients’ businesses), but there are plenty who glaze over when faced with a discussion of what’s really important to their clients. I’m not talking about their views on IP ownership, or liability clauses, I’m talking about how the business makes money. What’s the difference between a really profitable deal and an average one? What activities drive the profit margin? Where are the big chunks of cost and how can they be managed?

The discussion highlighted that this business understanding has a number of different levels. Perhaps the most important is an understanding of the commercial basics of the business – in particular how it makes money. But wrapped around that, but subtly different, is an understanding of the business environment in which the organisation operates. This encompasses (amongst other things) competitors, customers and the supply chain. Some private practice lawyers who have a deep understanding of a vertical sector may well be able to demonstrate this, which is why true industry specialists really can add value by placing their advice in context. However, as I’ve written before, many law firms’ vertical strategies only run skin deep.

Two other types of business understanding which were highlighted were firstly a solid grasp of the operational or technical detail about what the organisation does (this will be important for commercial contracts and litigation) – this is the classic “the devil is in the detail”. The old approach of “we’ll leave the contract schedules for the commercial folks” no longer works when you are in-house, because you soon realise that when there’s a problem, the chances are that it’s the service credit schedule or the payment mechanism that’s at the heart of it, and claiming that you only drafted the front end of the contract simply won’t cut it.

Secondly, for more senior lawyers particularly, an understanding of the organisation’s strategy will be important. Not only will this help the legal function start to think ahead and assess the legal implications of the business’ plans, but it will also allow alignment of legal objectives with business objectives, which is critical if the legal team is going to maximise its value to the business.

2. What language are you speaking? 

 The most fundamental rule that in-house lawyers need to learn early is the need to stop “speaking legal”. Using legal jargon and concepts is a sure-fire way to alienate business colleagues. Internal clients and other stakeholders are likely plenty bright thank you very much, but have not had the benefit (or pain!) of years of legal training, so rather than using legal shorthand because it’s quicker and easier for you, engage brain and translate into plain English. As with drafting, it’s harder and takes longer to begin with, but the end product is far more useful to a non-lawyer.

The sting in the tail is that in-house lawyers shouldn’t rely on their business colleagues to translate the “management bullshit” that permeates the corporate world (and let it be said, you can probably find a fair smattering of that in my blog posts, so I plead guilty!). A good working understanding of business terminology will make communication much faster and also facilitate communication with the consultants that will invariably appear on large projects. While easy to dismiss as “management speak” the widespread adoption of these phrases, particularly in large organisations, means in-house lawyers need at least a basic understanding to ensure key concepts are not “lost in translation”.

Aside from the actual language used, the presentation of the advice was also seen as being really important. As a general rule, avoiding really long notes of advice was seen as a good starting point, but there was also an acknowledgement that good in-house lawyers are able to tailor the presentation of their advice for their audience. This doesn’t mean compromising the advice in any way, rather that it is presented in a form that is appropriate for, and easy to understand by, the particular internal client.

One way in which the communication gap can be closed at a more general level is for the in-house legal team to train key internal groups on how to use a legal team effectively. This type of “soft” education may require an up-front time investment, but can pay dividends over the longer term and also help build relationships.

3. Cut to the chase!

A key point that emerged was that in-house lawyers need to have the ability to prioritise the issues. This helps their internal clients understand what is most important, but also if time is limited, will also make sure the lawyer focuses on the items that will have the biggest impact on the business.

The concept of “good enough means good enough” was discussed – the idea that in-house lawyers often do not have the time to do a “Rolls Royce” document review, and that there was a need for lawyers moving from private practice to become comfortable with the idea that it was better for them to spend 15 minutes looking at a document to highlight the key issues before a meeting, than either (a) for no-one to look at it at all; or (b) to wait for enough time to do a “proper job”, only to find that the business couldn’t wait for the advice and has gone ahead without any advice at all.

4. Get stuck in son!

Although not a skill, a can do, pro-active approach was seen as a valuable characteristic for an in-house lawyer. As one lawyer commented – “you’ve got get stuck in”. This might mean picking up more basic tasks that might be delegated in a law firm environment, or it might mean stepping out of the comfort zone to advise on an unfamiliar area of law, in both cases to allow the business to move faster.

For transactional lawyers, commercial expectations have risen and the in-house lawyer is now expected to have good project management skills and work collaboratively as part of a wider team (it might sound simple, but let’s not forget private practice lawyers often work in a very competitive environment, particularly when chasing partnership, and we all have stories of disfunctional cross-departmental teams). These are table stakes. The very good in-house lawyers can go a step further, and help really drive deals through, using a combination of sound transaction management, good commercial nous, and that “can-do” attitude.

5. Don’t bring me problems – they just make my head hurt

Good in-house lawyers, like the best private practice lawyers, are recognised by their businesses as problem solvers. By giving advice that is focussed on finding solutions and using their creativity to overcome roadblocks, lawyers can really help their internal clients. Making sure advice is practical and not too abstract helps achieve these goals, but it’s also a combination of many of the factors above that can lead to break-through solutions.

Take a good understanding of the business and the commercial context of the project, a pro-active attitude and the ability to prioritise the key issues, mix in the ability to communicate effectively and work collaboratively, and you’ve got in-house dynamite, capable of blowing away even the most stubborn legal problem!

Surely there must be more to it?

Well, yes, of course. There were plenty of other skills and capabilities mentioned, from understanding the organisation and its culture, through to stakeholder management, relationship building and influencing skills. But there was also recognition that if a lawyer didn’t get the five basics right, it may well be that their in-house careers wouldn’t last long enough to allow them to develop the additional skills that sees the very top in-house lawyers rightfully claim their seat at the top table of the world’s best organisations.








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