Changes in the attorney-client relationship

Dear Julia

I would like to thank you for the chance to have you here and to learn from your insights into the legal services market, particularly in the UK.

Bruno Mascello: When you look back over the last 10 to 20 years, what has changed in the market of legal services?

Julia Chain: The way the in-house community has provided services has changed dramatically. In the past the in-house lawyers were to some extent isolated from decision making within the business and worked in a reactive mode only. The General Counsel (GC) rarely reported to the CEO, or even the CFO. In the main, lawyers were just there to answer legal questions and were considered a cost function without adding much value.

What does it look like today?

Today in-house counsel have much more recognition and standing in the business. The GC often reports to the CEO and the in-house legal team is more often considered a strategic partner adding value to the business. For example, I have personally experienced how using litigation as a strategic tool to protect and enhance the company’s brand can add significant overall value to the company. In-house lawyers have a much more commercial view today and are providing required information to enable the business to take informed decisions.

What has changed in the working relationship between in-house counsel and external lawyers?

Today in-house counsel have established far tighter controls over their external counsel, not only with regard to cost but also with regard to what they deliver. An in-house counsel is expected to act more like a project manager making smart decisions when placing the right “horses for courses”. This means that in-house counsel are far more aware of cost and what they buy. Today the work external law firms receive is split according to business’ needs, i.e. some important legal work goes to big law firms, others are allocated to small law firms and then there is some work which is done by non-lawyers such as legal process outsourcers. The criteria is very much optimization of cost and efficiency. It’s far from perfect yet but I think this is way that the relationship is going.

What does this mean in terms of competition?

We see that a more strategic approach in outsourcing work to external counsel is applied and panels of law firms are more frequently used. Customers look for trusted relationships using fewer law firms and general counsel do manage external law firms. Interestingly enough external counsel seem not yet to have fully understood that things are changing and that the GC is becoming far more discerning when choosing external law firms and far more particular about understanding costs and the need for real transparency in how the service is being provided.

What kind of work is done in-house and what is bought from external counsel?

Some 20 years ago usually you went in-house when you were not qualified enough or looking for more quiet life. There were of course notable exceptions but that was the reality. Today it is different since one third of lawyers work in-house and are highly qualified. Consequently far more of the high-value work is done in-house and the low-value work is outsourced to the law firms.

Does this apply to the UK only?

Not at all. This also applies to Europe and the US as well. The US has always lead the way in recognizing the value of in-house lawyers but the UK and European market is catching up and will , I hope, quickly follow this trend.

What concerns do external lawyers have about their clients and vice versa?

External lawyers are concerned when clients have unrealistic expectations, provide bad quality of instructions and do not actively manage projects. General Counsel are always concerned by lack of focused and proactive customer service, in particular the lack of transparency and unprofessional communication (e.g. when law firms do not say what they cannot do).

Can you make an assessment with regard to lawyers’ competencies in questions of management and business?

I must admit that in general across the community lawyers have a very poor knowledge of business matters. The commercial awareness of clients’ business and economic needs is low and lawyers lack basic financial skills – many lawyers cannot read a balance sheet. But the good news is that there is a recognition that this has to improve and to be a business lawyer is considered a commercial job which requires proper training in commerce and finance.

How do you recharge your batteries after your hard work?

I go running since I need some physical exercises after having worked with my brain all day long. It just feels good. And I take my holidays all the time, which is very important!

Anything else which I may have missed?

I just think being an in-house lawyer is a very challenging and multi-tasking job nowadays. But it is hugely rewarding, and provides many opportunities. Being an in house lawyer will become even more interesting and important in the next ten years. Definitively a good place to be!

Julia, I would like to thank you very much for the time and insights you kindly shared with us.

02/2013