Monthly Archives: May 2010

Lawyers’ love in? Working collaboratively with competitors

Whether it’s the ongoing media focus on our new coalition government, or just the emergence of some spring sunshine, I’ve been thinking about happy togetherness this week. One of the things that used to warm my heart most in-house was when my key law firms used to work together collaboratively and effectively on projects for the company.

The panel firms thought this collaboration was going too far....

Talking about this subsequently, many private practice lawyers find the idea strange (perhaps even unpleasant): “what if the other firm dropped the ball?”, “what if we disagree and give conflicting advice?”, what about our opportunities to cross-sell?” and “surely it would be quicker/cheaper/easier with one firm?”. The short answer is of course that it just worked. However, a little more meat on that answer might be helpful.

Firstly, trust was critical to the network of relationships. I had invested time and effort in developing deep relationships with a handful of firms, and the law firms involved reciprocated this effort. These relationships were typically centred around different areas of work, geographies or specialism. The firms knew which other firms provided services in those core areas and that as long as those relationships continued to function effectively, the switching costs and loyalty involved would mean that this work would stay where it was. That fact, along with an understanding of my approach to buying legal services, meant that the firms never tried to eat each other’s lunch. That’s not to say they weren’t entrepreneurial or wouldn’t compete for work that was put out to tender, but that for the regular work, all the players in the team knew their role.

While I encouraged them to communicate, over time they began to discuss service delivery best practice, and work between them became seamless, and I think the ultimate validation came when problems did arise (as of course they would if a single firm was dealing with a complex transaction). Issues were resolved quickly and professionally, with no finger-pointing or backside covering.

Let me give an example of how it works. Let’s say I was leading a build-operate-transfer technology outsourcing deal for my company. I would lead the deal and negotiations, acting as the primary legal contact and interface with the business. My go-to commercial firm (an excellent UK practice) would be my main support on the main documents and the ongoing service provisions. this would be the firm that best understood our commercial models and licensing terms and also had the greatest familiarity with the business people involved. On the employee issues would be a niche City firm that had harmonised our terms and conditions across many jurisdictions and who knew our HR practices and attitudes inside out. The “operate and transfer” part of the deal could have some complex corporate and tax aspects which required a global firm, and our London account partner would co-ordinate that advice from their overseas offices, calling on their background working with us on acquisitions.

Revolutionary? I think not. Part of a strategic master plan? Nope. Was it effective? Yes. Were the lawyers involved comfortable working that way? Yes. Worth considering in future if you are part of a group of firms working regularly with one client? I’ll leave that with you….

Inhouse firefighters

Speaking at an Intellect event this week (don’t worry, the group is a trade body for the UK technology sector, not some type of meeting of great minds!) much of my content touched on the role in-house legal teams play, and it occurred to me that with much of my focus on law firms, I haven’t been showing the in-house community much love. And let’s be honest, they need it. With their business colleagues wanting faster responses, more commercial insight and a greater range of advice (new markets, new geographies, new regulations), there are more fires to put out at a time when strategic direction is more valuable than ever.

In-house legal sort out the mess again

The question of where the in-house team can add value has long been debated, but often the business sets conflicting priorities for their in-house colleagues. On one hand the board may push the general counsel to get his or her team to give more proactive advice that facilitates the growth of the business (help shape our thinking about which markets we should enter, review acquisition plans with us), the human resources department may have their own needs (help me up-skill the managers so they manage their employees better and avoid claims) and the front line commercial folks are screaming for support to do deals and bring in revenue. In reality who has the loudest voice (or longest job title) may determine what gets done, but bar the odd token off-site meeting, there is precious little time to reflect and plan things more effectively.

Compounding this, the in-house team are often measured (and critically, rewarded) by a set of metrics divorced from the strategic activities that can create longer term value for the business.

So what can be done? How can our legal firefighters be free from the need to run up another tree to save a trapped feline, and spend some time thinking about fire prevention? The answer will of course vary by organisation, but a good starting point is understanding the stakeholder community. Who are the key stakeholders for the legal team? What are their real priorities? How are they measured and what will constitute success for them (at an organisational and personal level)? Once priorities are understood, the next step is to map these against where time and resource is being spent at the moment. The majority of in-house lawyers would recoil at the idea of recording their time, and while I am not advocating recording time on a 6-minute-unit-law-firm-kind-of-way, I do think it’s important to have some hard data about where time is being spent. Peter Drucker addresses the reasoning for this in his excellent book “The Effective Executive”.

Once the in-house team have an idea of what their stakeholders’ priorities are, what their resource profile is and how those resources are spending their time (and this includes external counsel as well as the in-house team), then questions can be asked which will help facilitate a different way of working. The answer may be in organisational design, it maybe in communication, it maybe in the balance of internal and external resources, it maybe in addressing skills gaps (or indeed a host of other areas), but the point is that the team can start to make much more informed choices about where they spend their time to create value for the business. More value means more love, something that in-house teams deserve.

When negotiations turn nasty

No escalation path for Mr Clegg if Mr Cameron proves difficult

Oh to be a fly on the wall in the current negotiations between the political parties striving to govern my country. Talk of ideological differences and deal breakers fill the air, triggering flashbacks of negotiations I supported or lead as a lawyer. One place where the similarity ends, is the lack of escalation if a problem arises. When Clegg and Cameron are sitting round the table, if they get stuck or fall out, there are no senior figures above them to dispense answers, wisdom or discipline to get things moving.

This got me thinking about some of softer skills that lawyers can usefully deploy on projects. Too often lawyers are bought and sold on the basis of their technical skill set or experience, and while there can be no doubt this is critical to their effectiveness on the job, it is not the whole picture, and never is this more evident when the going gets tough.

When problems raise their heads, I’ve seen many different responses. Some retreat into the comfort of their technical expertise “well, it’s not an IP issue, so I’ll let the corporate lawyers sort it out” or “it’s not so much a legal issue as a commercial one, it’s for the client to resolve”. The flip side is of course the in-house lawyer who retreats from the detail “this is too technical for me, I’m a generalist and this needs specialist advice”. There are of course, two sides to the coin, and problems also offer an opportunity for the better lawyers to shine. Creative problem solving, especially when it’s not within the lawyer’s area of domain expertise always wins points, and in many cases it doesn’t need any technical expertise, just some lateral thinking. Bright, articulate lawyers can be just as capable of this as their commercial, operational or financial counterparts and similarly the newly qualified lawyer can provide this type of break-through thinking just like the seasoned partner.

Another area where lawyers can shine is in managing escalations. Knowing how to escalate, who to escalate to, and having the communication channels to so (both informally and formally) is a critical skill, the importance of which is often under-estimated. The ways in which external counsel and in-house lawyers can do this may differ, but the skill is common. I have seen deals quickly put back on track by a quiet word in the ear of a very senior executive, and I have also seen all hell let loose when a relatively minor project issue ends up on the desk of the CEO (although personal reports from the project manager to the CEO of a listed company certainly focus the mind, some of the other consequences are certainly not career-enhancing!).

The list of non-core skills to consider on a deal is lengthy (and I definitely want to keep some of them back for future posts!), but at the start of a deal, look at the assorted legal firepower at your disposal, and try to assess what skills and capabilities you have at your disposal, aside from the pure legal knowledge. Get the right blend and deals can be a whole lot smoother, and maybe (just maybe) the next client to pick up the phone will be the future Prime Minister.

Money, money, money; but what would you spend it on?

Entirely brushing aside any discussion about the consumerism that is rampant in our society, and indeed the inability of material goods to bring lasting happiness, I was recently confronted by the question “what would you like for your birthday?”. Effectively asking me how I would like to invest a small amount of capital to produce a return giving me maximum satisfaction. With the next stage of the implementation of the Legal Services Act here in the UK, some of the more forward-looking firms are asking them a similar question. However, instead of kindly friends and family asking the question, it will be external investors who will be looking for opportunities to find law firms helping them to get a return on their capital.

What would the firm like for its birthday? Socks?

So here’s the interesting question for lawyers in private practice, if you had an investor offering to put some capital in your firm, what could the firm invest that capital in to produce a significant return? What could the firm do that it simply couldn’t fund at the moment? I think this offers a great opportunity to do some really visionary thinking and prompt some challenging internal dialogue. What does the firm require to take it to the next level? Are there new markets you’d like to enter? New services you’d like to launch? What about a significant talent upgrade? Is the IT infrastructure creaking and holding the firm back? Does the brand need an overhaul and that, coupled with an investment in business development, provide an opportunity to really grow the top line? Is there anything that the firm’s clients are beginning to require that the firm can’t deliver (either at all, or cost effectively) at the moment?

Moving on from the basic questions about where the firm would invest these imaginary funds, there are a host of related questions that can deliver insight. What would your competitors do with that sort of capital? What will happen if they secure that type of funding and actually execute some of these types of plans? what type of returns do we think investors will want on their capital? Would we be attractive to external sources of finance, and if not, why not? If we secured finance and wanted to put some of these ideas into practice, could we successfully implement them? Does the partnership have the right mechanisms for deciding how to allocate this type of funding?

It maybe that external funding is not on the radar at the moment, and as such these questions seem irrelevant, but much like scenario planning (a strategic planning technique I’ve mentioned before), exploring a range of possible futures brings fresh insight to the present . If all you’ve invested is the time for a lunchtime discussion, I think that’s a pretty good return, particularly as you might have had some fun in the process.

For anyone interested, the birthday present I requested (but didn’t receive!) was a Black Russian Terrier dog. A little known but totally cool breed!