How Top Ranked Law Firms Stay Ahead of the Competition: In-house Decision Makers Reveal their Secrets on Selecting Outside Counsel.

Having worked with hundreds of General Counsel across Canada, the one thing they are all passionate about is their relationship with their key law firms and external lawyers.  

Every year, ZSA hosts the Canadian General Counsel Awards (it is the Oscars for lawyers FYI), and in most cases the winners in every category give a shout out to the external firms on which they rely. The combination of the right firm with the right in-house legal team is like alchemy and can generate sustainable long-term competitive advantage for a business. But how does this happen? What strategies do chief legal officers use to select, retain and develop their outside counsel? How do they approach difficult conversations? How can firms add the elusive value that organizations demand?   

Most of these in-house leaders lament that their firms do not ask for feedback often enough. Well, we asked. And here’s what they said. Unvarnished.

Principles for Selection of Outside Counsel

1. Rely on Recommendations, Build Trust and the Relationship Slowly.

I’ve known Frank Reda, Chief Legal & Compliance Officer at Gallagher, since law school and he is one of the most brilliant and likeable lawyers that I have ever come across. Everyone who knows him turns to him for his candid advice and invaluable insights and here is what he had to say:

“Selecting the right law firm, or more specifically, the best lead lawyer to assist on a project, transaction or litigation matter is a decision I do not take lightly. Given that I commonly hire external counsel for important, sometimes transformative business matters, such as a M&A transaction or large litigation file, the wrong decision may result in additional legal fees, more work for in house legal teams and cause legal and business ramifications that may linger for years. Although I have used RFPs in the past to select external counsel I believe the best approach is to reach out to new and old colleagues as well as business partners for recommendations that are based on experiences with a certain firm or lawyer.”

 A dear friend of mine and incredibly talented lawyer, Jamie Greenberg, Wattpad’s General Counsel emphasizes developing a relationship based on trust. Jamie is not only a mensch (a useful Yiddish term meaning a person of integrity and honour), but also has successfully mastered the notion of wearing his legal and business hats simultaneously (a skill that is difficult to master):

"I always lean on lawyers I know I can trust to not just get the job done, but also look into the future. Outside counsel that thinks like inside counsel, knows a bit about our business and can balance the legal issues with the practical issues is invaluable. That all comes with a measure of trust, and that trust is built through constant communication; I can't imagine ever hiring a lawyer I just met on an important business matter."

If you don’t know Jonathan Cullen, Vice President, Legal Affairs & General Counsel at Pfizer Canada, then I strongly urge you to look him up. Guided by the principle of people-centered leadership, Jonathan brings his unique combination of compassion, foresight and thoughtfulness in his approach and is never afraid to challenge his team to continuously improve the quality of their legal advice. Always treating his colleagues as people first, Jonathan continues to have a profound impact on his organization, friends, colleagues and legal community as a whole. He believes in the mutual value of long-term trust and starting from the basic building blocks of an organization:

“The external lawyers I hire have to reflect my organization’s purpose and values. We strive for breakthroughs that change patients’ lives and value excellence, courage, equity and joy. That is the blueprint against which my team and I are measured. If our external counsel are to be an extension of our organizational strategy, the starting point is not that strategy; it’s understanding our culture and how we serve patients, customers and society. That does not happen overnight. It requires investments of time and energy. But I will reciprocate - if I don’t care about your firm’s culture and objectives, then I don’t deserve your efforts.”

2. Subject Matter Expert, Judgment and the Confidence to Share the Spotlight.  

Personal expertise is a given. But there is an important flipside to that competency:

 “The most critical factor for me, and for most Chief Legal Officers (CLO)/General Counsels, when selecting an external law firm is to ensure that the firm and lead lawyer have the right expertise for the particular matter. The lead lawyer also needs to have the necessary judgement and humility to be able to reach out to subject matter experts when issues arise that are outside the lead partner’s comfort zone. Important for me in this process is also having the partner inform me well in advance of the need to seek expert advice and the associated costs in doing so.” Reda explains.

 Alton Williams, Associate Vice President, Privacy and Legislative Compliance at Canadian Tire Corporation, is well recognized for his business focused legal advice. His impressive track record of overseeing large global companies’ compliance function, is a result of his tenacity for delivering practical advice. Always there to lend a helping hand to others, Alton is simply someone you ought to get to know. His advice (as always) is spot on:

"I'm less fussed about the firm but want to know that the individual lawyer is very well versed in the subject area I'm concerned with. I look for practioners who are respected in their field and have contributed innovative and novel approaches to the issues at hand. These days I'm less interested in who knows the black letter of the law best, but who has proposed creative solutions to legal issues faced by organizations like mine.  Law firms should be working closely to understand the businesses they support. Not just the industry or sector, but also the specific business. Much of my time is taken up synthesizing the external advise into direction that can be actioned by my business. A better understanding of the internal dynamics within client businesses would speed up that process. Understanding things like the risk appetite of the particular business; how interested the business is in pushing or not pushing the envelope on a particular initiative, etc."

3. Personal, Meaningful, Consistent Communication & Always Keep Diversity and Inclusion Top of Mind.

Delegation is an essential skill for any high performing lawyer. However, there are some tasks that you may considering retaining:

"Aside from the firm wide email blasts, I always appreciate a quick personal note from outside counsel checking in on how things are going, pointing out some issues similar business are facing or updating me on a law that may pass and impact my business. This serves as a touchpoint with outside counsel, and is also a realistic way to drum up business; top of mind really does count for a lot. Also, I might add that having your assistant or business development manager send an intro or check-in email on your behalf is a great indicator to me that you don't value our relationship enough to take a few moments to send that email yourself." Greenberg explains.

Vivene Salmon, President of the Canadian Bar Association , is someone I truly admire and look up to. She has an incredibly impressive career path and a great deal of experience selecting outside counsel.  She offers some great advice to law firms across the country,, while taking into consideration diversity and inclusion matters:

"The most important thing element in the relationship between law firms and in-house counsel and the companies they represent is good communication. Both parties must put in the effort to foster good communication in order to build and maintain the relationship. Most companies see their relationship with external counsel as a long-term one, however law firms should not take this for granted. Law firms must ensure that the person put on the file can not only complete the work requested but also do so with an understanding of the role of the key players, how the company operates within its respective industry, and challenges unique to the company. Without good communication, the other key ingredients are a challenge. It's important to clarify the work, the timeline, and to understand that companies are concerned about firms building their pipeline -- this means that young lawyers, women and racialized lawyers are included on the file in a meaningful way -- early on. When they spend money on external counsel, companies are looking for clear answers and a course of action, not pages of flowery legalese that fail to get to the point or to give a clear legal opinion. Fostering good communications to maintain the relationship could also include inviting the company to PD or webinars that the firm is producing, or even forwarding notable articles of interest to the industry.

4. Responsiveness. Within Reason.

Having recently worked with Eli Cranley, Senior Legal Counsel at Canerector Inc., I will say that you are lucky if you ever get to work with him. His invaluable advice resonates with those he mentors and I always enjoy his forthright approach. He admits that the lawyers that he enjoyed working with the most are the most responsive: 

“I am not unreasonable but you want someone who will get back to you (even if its on their radar and they can’t help in that particular moment).”

5. Help General Counsel Manage their Budgets.

There are going to be fees involved, there’s no getting around it. Yet that is an opportunity to support your client, not make it more difficult. Greenberg tells us the following:

"I like to know what I'm getting into up front. The days of unlimited external counsel budgets are long gone, and inserting cost certainty into the process through fixed fee arrangements of some variety is essential to the business. Outside counsel sometimes doesn't appreciate that in-house counsel is juggling our own budgets, and fixed fee arrangements provide certainty for us so that we can continue to hire outside counsel for important matters in the future. Also, frank upfront discussions about costs allow you to avoid a back and forth over billing later, something that is not fun for anyone."

To sum it all up, General counsel want to work with firms that really listen to them.

So, what practical steps can law firms take to gain trust of new clients and take existing relationships to the next level?

Stop selling. Empathize with your Client’s Needs and Deeply Understand their Business.

Jordan Baum, General Counsel at Freed Developments, has had an incredibly successful and impressive career in the real estate industry. He embodies strong leadership qualities, takes great initiative and helps his organization achieve optimal results. He reveals the importance of gaining institutional knowledge:

“Learn our business and understand the dynamic of our office and executive team in order to give practical advice and to add value in your legal services.”

Try asking how your advice was transmitted to the internal business clients of the organization:

“Make my problems, your problems”, says Jonathan Cullen. “The more my firms put themselves in my shoes and try to solve problems using my organization’s goals, risk tolerance, language, approach and constraints, the more impactful the solutions will be. I don’t think most outside counsel realize the tremendous amount of massaging their advice requires before it gets unleashed onto our businesses. The dense language and hedging is brutally chopped and we replace it with either nothing or meaningful context that our businesses can understand, get behind and act on. That is mostly wasted energy. You know you’re doing something right if I’m letting you directly interact with other senior business leaders, witnesses and hardworking colleagues who have day jobs and are not generally impressed with the human touch of lawyers. If that’s not happening, ask me for examples of how your advice was digested and transmitted to the ultimate customer. And be prepared to be shocked: your nine-page brilliancy was likely summarized in the few seconds it took me to pay for my sandwich in the cafeteria lineup while my client was topping off her coffee. It was not as good, but it was good enough to advance my business, apace.”

Be Creative and Proactive with Fee Arrangements. Make it your Differentiator in a Crowded Market.

Reda expresses “I also believe external counsel should be initiating the discussion with the CLO/GC on creative billing options and not wait for the question to be raised by internal legal teams. CLOs/GCs are expected to work within a legal budget and therefore we do not expect to hear from external counsel that it is too hard to predict costs.” 

“Consider offering creative fee arrangements (i.e. flat/fixed-fee, contingency fees, etc.). Where appropriate, try to delegate to junior lawyers in order to keep costs down.” Baum tells us.

Offer Practical Advice.

“The ultimate goal is for external counsel to become a seamless extension of the in-house legal team. The best guidance I can provide external counsel is to be practical in providing advice, as this will demonstrate whether they understand the implications of their legal advice within the realities of my business.  For this to work however, they will need to learn the intricacies of the industry and the business.” Reda confesses.

Send Short and Concise emails.

Reda explains: “With work volumes increasing for in house legal teams it is important that external counsels communicate succinctly and in a useful manner.  There are times that I require a long memo but other instances that a simple e-mail or phone call will do. External counsel needs to know when one method is preferred over another.”

Highlighting Risk and Reward is Necessary but Insufficient. GCs need Solutions.

"The reason in-house counsel calls on outside counsel is to help us shoulder the burden and make good decisions. We expect honesty, forthrightness and an actual opinion on the best course of action. Doing the research and presenting options is a great resource, but when I decide to spend time and money on outside counsel, I expect them to come to the table with an opinion on the best course of action to consider. We need to know risks and rewards, but the best lawyers come to the table with solutions." Says Greenberg.

  Do Not Shy Away from Difficult Conversations.

“Be honest and truthful. If something was missed on a file or the intended outcome on a matter is in doubt – don’t sugar coat the message. CLO/GCs need to deliver hard realistic facts to the CEO and Board of Directors and being made aware of all developments on a file whether positive or negative as soon as they are known allows CLO/CGs to pivot internally and ensure any consequences are mitigated.” Reda tells us.

Think Long Term. Think about how the Client can Develop Lawyers at the Firm.

A relationship is always a two-way street and it’s not transactional. As Cullen says:

“My business makes plans in terms of the next ten years. I need to match that forethought. My business develops high-quality, two-way relationships with service providers that maximize the net value shared between them. The best firms help me develop my team. I’m also committed to developing theirs. If they want to expose us to the associates they believe will be the firm’s future and the partners on my file, then tell me their weaknesses and I will help you develop them. That’s value creation you don’t consider in a short-term transactional relationship. That is how we will best serve patients and the healthcare system and that is how we will out-compete the market.”

The Secret to Helping Clients Build Sustainable Long-Term Competitive Advantage

During times when in-house teams are evaluating how external counsel will adapt to a very fluid and dynamic world, it's critical to adopt a client-centric approach.  Decision makers in-house tell us that they want outside counsel who they trust, truly want to understand their business, advocate fiercely on their behalf, and who are proactive and creative when it comes to fees.

Are you thinking about how you can elevate your relationship with your client to ultimately co-create a more competitive business?

Perhaps you ought to listen to the decision makers, and get a sweet shout out at the next Canadian General Counsel Awards. Hope to see you all at the virtual event this year.