At Their Service: Outside Counsel’s Role in Working with Large Corporate Clients

Vol. 17 No. 1

By

Stephanie P. Hales is an associate with Sidley Austin LLP in Washington, D.C., where she practices in the Healthcare and Government Strategies groups.

The key question for large corporate clients is not whether outside counsel can help—but how. In particular, how can outside counsel be most efficient for the company in the most cost-effective manner? Younger lawyers in particular can benefit from, and cultivate strong internal and external relationships by, understanding the ways in which outside counsel’s services and resources can effectively assist and support large corporate clients.

The Nature of Outside Counsel

Large, complex companies—by their very nature—have large, complex legal issues. As large corporate clients strive to maintain vigilance and mitigate risk over the long term, outside counsel are at their service to assess and assist in managing those issues once they arise, such as through a litigation matter or government investigation. Just as crucially, outside counsel provide a broad array of proactive services that can promote diligence and facilitate the identification, mitigation, and, in many cases, resolution of latent issues before they explode into full-fledged lawsuits or crises.

Ahead of the Curve: Proactive Services

Just as regular check-ups can reduce the risk of medical emergencies, so too can proactive legal services aid clients in addressing potential issues before they develop into legal crises. For example, large corporate clients, such as pharmaceutical companies, can work proactively with outside counsel on the following types of matters.

Regulatory Advice and Counseling. Which laws and regulations apply to the company, its operations, and its proposed initiatives? What does compliance entail, and is the company proceeding optimally? Outside counsel can add value by assessing these questions from an external perspective, but with industry-specific expertise that is focused on the client’s particular attributes, needs, and circumstances.

Compliance Risk Assessments. Outside counsel can assist in reviewing, for example, the company’s policies, procedures, and practices. Are compliant policies and procedures in place? Are personnel adequately and appropriately trained on those policies and procedures, and are they implementing them in practice?

Internal Investigation. Do particular aspects of the company’s operations increase complexity or raise legal ambiguity? How are these complexities and ambiguities handled? For pharmaceutical companies, these areas may include compliance with government price reporting rules, fraud and abuse restrictions like the Federal Anti-Kickback Statute, and reporting and disclosure laws such as the federal Sunshine Act. Outside counsel can help a large corporate client navigate these complex areas and develop compliance plans that address the company’s needs in light of its particular operations, the applicable legal backdrop, and the relevant enforcement environment.

Risks and Opportunities on the Horizon. What are the current policy trends relevant to the company? What legislative and regulatory proposals are being considered? How would those changes, if implemented, affect the company? Outside counsel can monitor these developments, identify both risks and opportunities on the horizon, and assist the company in (1) preparing in advance for—and, if desired, weighing in on—the risks before they materialize, and (2) ensuring that, where prudent and possible, potential opportunities are pursued, rather than missed.

Responding Under Pressure: Defense-Oriented Services

Of course, not all legal emergencies are avoidable or averted. When crises arise, working effectively with outside counsel can streamline and enhance large corporate clients’ ability to respond to and defend against high-pressure and high-risk situations such as lawsuits and government investigations.

Strategy and Tactics. Outside counsel often have robust experience with key players in litigation and investigation matters. These experiences can provide insight as clients consider decisions such as whether and when to negotiate, whether to settle (and for how much), which litigation strategy to employ, which witnesses to depose and how to approach them, and so on.

Comprehensive Perspective and Full Service. Having three branches of government means three prongs of potential attack. Along with public and private litigation that proceeds through the judicial branch, large corporate clients face risks from federal (and state) agencies in the executive branch and from lawmaking and oversight bodies in the legislative branch. Outside counsel can be of service in all of these spheres—and in spotting issues across the spheres to coordinate a consistent and comprehensive response.

Connecting to a Network. Outside counsel have broad networks, both within and outside their own firms. They can connect clients to attorneys with particular specialties in their firms or to known local counsel in relevant jurisdictions, sometimes within minutes. And, during fire drills, every minute counts.

Preserving Privilege. Outside counsel can research and engage consultants on a client’s behalf. Pharmaceutical companies, for example, frequently seek out contractual partners such as specialty pharmacies, distributors, or other service providers. When outside counsel engage and direct the activities of these consultants on a client’s behalf, it can help preserve arguments that these evaluations are protected by attorney-client privilege or work-product doctrine (which typically are more challenging to assert if the company’s business personnel directly handle these engagements).

Large corporate clients—and the issues that they face—are sophisticated, diverse, and complex. Outside counsel are well-equipped to handle these issues and to support these clients through a wide array of both proactive and defense-oriented services, which can and should be appropriately tailored and fine-tuned to the particular needs and circumstances of each client.

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