September 13, 2019

The Value of Ethical Legal Services - Best Ethical Practices to Strategic and Tactical Practices to Provide the Corporate Client The Value It Wants While Abiding By the Rules of Professional Conduct

The phrase "do more with less" has never rung truer than today for lawyers who represent organizations, whether they practice in law firms or in law departments.  Every organization looks to maximize the value that it realizes from its expenditure on legal services whether that be for its in-house counsel or its external lawyers. Meanwhile, lawyers are still challenged with complying with their ethical obligations around how they structure fees, how they structure the scope of their representation, and how they represent to clients the value that they add.  

Specifically, ABA Model Rule 1.1 requires that lawyers competently provide counsel; and, Rule 1.2 defines the parameters within which lawyers must work when defining the scope of representation.  ABA Model Rule 1.5 provides that lawyers may not charge unreasonable fees yet acknowledges that lawyers should consider the value they are providing which includes the knowledge and experience a lawyer brings to the representation.  Further Rule 1.5 does permit lawyers to take into account when agreeing on a fee the fact that a lawyer will not work on other matters as a result of the representation.

In addition to these standards, lawyers must also consider how they communicate their value.  For example, ABA Model Rule 7.1 prohibits any statements about legal services that may be false or misleading to a client, even if only by omission.  And, ABA Model Rule 7.4 directs that generally, unless practicing patent or admirality law, a lawyer may not represent themselves as a “specialist” but, may indicate their areas of practices.

The pressure from clients to maximize the value of legal services, along with the mandates of the Rules of Professional Responsibility, place lawyers, both in-house and external, in the challenging position of providing exceptional, valuable legal services for a fee that reflects that value yet complies with ethical obligations around competency, scope of representations; and communicating about lawyers’ capabilities.

For example, if a company has an in-house law department, of course, the primary responsibility to wring the most value from the company's legal budget (not to mention the cost of the in-house law department itself) falls on the in-house lawyers as part of their mandate to manage the organization's legal affairs.  This challenge becomes even greater for a corporate compliance program.  Those responsible for that program must balance the company's need for a program that meets the expectations of regulators that the program include sufficient resources as defined in the Sentencing Guidelines for Organizational Defendants and other operative regulatory regimes with the need to achieve the maximum benefit for the organization at the lowest cost.  Successfully balancing those two imperatives, which can seem incompatible, requires careful selection and application of the resources most appropriate for the tasks at hand. 

But, it also challenges a lawyer’s compliance with their ethical obligations.  For example, organizational clients press lawyers to provide guidance or draft opinions that may assure the client it need not undertake what may be costly and time-consuming measures to comply with the law.  Organizational clients may insist that lawyers not spend time that the lawyers believe is necessary to develop a corporate compliance program.  Or, an external lawyer may have an organizational client that carves out only a small piece of legal work, keeping the remaining work to be done on the program in-house.  This lack of context may challenge the external lawyer to fully appreciate all factors that may impact their counsel.

With the renewed emphasis in organizations on increasing the value that they realize from their efforts in the legal and compliance arenas, how can internal personnel focus their efforts in that regard?  What tools exist that can assist them in that endeavor? And, how do both in-house attorneys and their external counsel, accomplish the clients’ objectives, to include managing costs, while complying with their ethical obligations in this setting?

From an operations perspective, though one can find a definition of "value" easily enough, applying that definition to what law firms, law departments and compliance departments do every day has remained a somewhat quixotic exercise.  Those departments manage an intangible in pursuit of similarly ephemeral goals, such as the absence of legal or compliance risks. 

The Association of Corporate Counsel launched the ACC Value Challenge in 2008 to reconnect value and cost of legal service.  While that initiative has highlighted discrete examples of greater value achieved by individual law departments and law firms, it has not yet led to the emergence of an accepted definition of what value means. The absence of such a definition has limited the impact of that effort.

Similarly, attorneys struggle to define the scope of representation and to provide competent legal advice when pressured by clients to provide “valuable” services within a client-created framework designed to control legal cost.  A client’s efforts to control costs may result in limiting a lawyer’s authority to spend time the lawyer believes is necessary to fully evaluate a problem and then to provide competent counsel while receiving adequate compensation for their time, experience, and counsel.

Accordingly, it is vital for the legal profession to explore how "value" can be examined and applied in a more utilitarian way.  As part of this, it is important to define and recognize that "value" (as it applies to legal services) varies in a number of ways, depending on the organization and people involved, the context in which the service is provided and other factors.  That recognition enables a focus on subsidiary qualities of the legal service that are "value-related qualities" or VRQs that are effective at defining a certainty of delivery and establishing metrics, both of which matter a great deal in the effort to increase the overall value of the service.

Since "value" relates to the entire range of legal services and its delivery, a discussion on value cannot occur without considering the ethical mandates for fee arrangements as defined in ABA Moder Rule 1.5; the solicitation and use of clients' perspectives on the scope of services, including the requirement that a lawyer provide competent legal representation (ABA Model Rule 1.1); the requirement that a lawyer and client define the scope of representation (ABA Model Rule 1.2).  However, in addition to this, a lawyer both in-house and external should also consider value by evaluating its internal processes as well as clearly communicating their value to clients consistent with ethical obligations.   

VRQs can be applied in the context of planning the delivery of legal services (both project planning and strategic planning) in order to achieve more efficient and more effective delivery of the legal service that best addresses the client's need while adhering to the rules of professional conduct.  VRQs enable the selection and use of the resource best positioned to achieve the result needed by the client.  Finally, VRQs can lead to better relationships between outside counsel and their organizational clients and how the approach that they encapsulate can benefit both in-house and outside counsel and their ethical obligations.