June 10, 2020 Feature

Commonalities of In-House and Private Practice in Law and Business

Kim Boyle

©2020. Published in Landslide, Vol. 12, No. 5, May/June 2020, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

Though the history of American law practice dates back centuries, in-house attorneys—even within the last 70 years—have been considered “a relatively recent phenomenon.”1 Correspondingly, the definition of the in-house role has traditionally been framed in its distinctions from lawyers in private practice. Indeed, the differences have been well-documented, discussed, and accepted as features of each role.

However, the study in contrasts that once was in-house versus private practice has shifted. It continues to evolve as the demands and opportunities in a global digital economy create a new legal and business framework. “Digital transformation is much more than platforms, AI, and data. The human element is paramount at all levels.”2 While there will always be uniquely different components of each role, exploring and understanding the commonalities is key to forging a successful relationship between in-house and outside counsel.

For those who have worn both hats (as in-house counsel and in private practice), we are fortunate to be able to personally appreciate certain key factors relevant to professionals in each role. However, even absent that personal viewpoint, one need only look to the myriad studies and benchmarking surveys to gain a better understanding of what in-house counsel want and how their outside attorneys can best serve their clients’ needs.

An infographic disseminated in 2019 highlighted 13 factors about what in-house attorneys want from the law firms they retain.3 Five of the factors that highlight the common themes critical to both types of practitioners are business knowledge, appreciation of the nature of the respective roles, continuing education and sharing, efficient and effective communication, and budget and forecasting. Being mindful of these factors in a new market climate allows the private practitioner to be a stronger advocate for the client and allows in-house counsel to better collaborate with the outside attorney.

Business Knowledge

“The general counsel is now a core member of the top management team and offers advice not just on law and related matters but helps shape discussion and debate about business issues.”4 The increasing expectation that those in corporate counsel roles will also possess business acumen sets the stage for those in-house lawyers to have similar expectations of their outside counsel. This is especially true as companies build and develop more robust internal legal teams at the expense of the possible dilution or even exclusion of outside attorney relationships. Therefore, the private practitioner who also comes to the representation with a commercial viewpoint has something in common with the client that tends to enhance the way they work together.

Under optimal conditions, this means something more than merely understanding the client’s specific business and organization. From a place of genuine interest, a counselor who considers the industry overall and who stays aware of what the client’s competition is doing in the market strengthens the counselor’s value to the client by allowing that knowledge to inform the legal guidance provided. It further helps build a proactive stance. For example, when the attorney notices media reports of an issue faced by a competitor, the attorney can more closely step into the fold with the client, be unified as to strategy, and offer salient legal advice. That strategy helps the client stay ahead of the issue it too may face. An attentive awareness like that could even help position a client to gain a competitive advantage. Imagine what issues may have been proactively addressed by business-minded attorneys during the period when “Lyft’s biggest gains came in the wake of the #DeleteUber movement, which started with accusations that Uber disrupted a taxi strike and spread as allegations of Uber’s toxic ‘tech-bro’ culture emerged.”5

Appreciation of the Nature of the Respective Roles

In some instances, a distinction can have characteristics that are shared by attorneys in both inside and outside roles. In-house attorneys are historically thought of as having only one client—their employer—whereas outside attorneys, of course, tend to have a variety of clients. However, it could be true that the corporate counsel has several clients too, be it different internal stakeholders to whom the in-house counsel reports or provides advice or different brands under one corporate owner.

Likewise, though the standard compensation model for each role is different, each is still expected to contribute to their employers’ bottom line. In an era when “[l]egal departments are under more pressure than ever to control legal costs,”6 there is a natural conflict between the billable hour model and the remit of a salaried, in-house counsel to be fiscally prudent in managing legal fees. When the corporate client and counselor seek to bring an appreciation for the challenges each faces to their fee- and cost-related discussions, the outcome can be more collaborative and satisfying.

Being more mindful of the similarities rather than the separateness of the demands each faces from its clients, a mutually supportive relationship of colleagues emerges.

Continuing Education and Sharing

Although when it comes to education the outside attorney’s primary objective may be CLE and in-house counsel’s may be industry/internal news and advancements, they both engage in the pursuit of new knowledge to enhance their respective practices. With that new knowledge also comes chances to share it—“for the outside counsel to educate the client on the most pressing legal issues they may face, and for the in-house team to educate the outside counsel on how their business works.”7

By fostering the collegial sharing of things learned, it deepens our knowledge of the information and feeds a culture of mutual respect. It also promotes a more productive attorney-client relationship: each benefits from the insight of the other and can carry the knowledge into their organizations. The in-house counsel can alert internal stakeholders to legal developments brought to in-house counsel’s attention by outside counsel as a means of adding value and informing strategy. The outside counsel can build the client’s business updates into the representation to provide more layered and nuanced guidance.

Efficient and Effective Communication

“Communication” sounds so straightforward that the merits of being intentional about it can easily be overlooked. In addition to the relatively obvious and commonly shared need for responsiveness and timely communication from outside attorney and in-house client alike, one of the most frequent requests from in-house counsel is that their outside law firms “[u]nderstand in-house language.”8 Of equal importance is in-house counsel’s desire to receive firm answers and succinct advice from outside counsel, delivered in a style that makes it easy for in-house counsel to advise the internal clients.9

In turn, in-house counsel should seek to be clear with outside counsel on communication preferences. This can run the gamut from knowing whether calls or emails are preferred and whether certain levels of guidance should be delivered on formal letterhead to requesting that outside counsel opinions be delivered with an executive summary that the in-house counsel can use as a discussion platform internally. When each is open to hearing from the other about what works best, efficient and effective communication becomes the norm, thus keeping outside counsel in the best position to be the reliable and valued resource of legal advice to its in-house client.

Budget and Forecasting

Like the other four factors, the issue of fees and costs is a concern shared by both in-house and outside counsel—even if each comes at it from their own perspective.

Correspondent to the call for in-house attorneys to also be business “hybrids,” those in in-house counsel roles are under ever-growing pressure to forecast and maintain budgets. One approach some firms adopt is crafting flexible billing models that best accommodate the concerns of each party. The law firm needs to generate revenue sufficient to maintain its operation and standards of excellence and offer quality service; the in-house client needs to manage the expense associated with outside legal fees. To the extent a given model is practicable, an outside attorney and its in-house client could explore flat fee structures for certain projects, monthly retainers for a certain number of hours with periodic true-ups, or other creative solutions.

Further, the parties can explore billing procedures. Many in-house attorneys have begun using billing systems and requiring their outside law firms to utilize the corporate system to submit debit notes. While this might introduce a new process layer on the law firm side, being responsive and flexible to client requirements is critical to the health of the relationship, and use of the system often results in a streamlined billing process and a more reliable payment timeline. For outside counsel, spending the time on the front end to submit the debit notes in the client-preferred format and/or via the client-required procedure can mean less time spent “chasing” collections.

Beyond fee structures themselves, there are other ways the outside attorney can provide value to ensure the in-house counsel is satisfied with the service. This is the benefit-cost ratio approach. A 2015 survey, for example, revealed that 60 percent of in-house counsel highly value project management, while only 17 percent of law firms think project management tools and skills are essential.10

With that in mind, outside counsel can offer its in-house client things like password-protected docket access, a personalized document review portal, an agreed status update report protocol, or other tools. The result is both tangible (the way attorney and client work together is made more efficient) and intangible (the attorney and client work collaboratively, and the relationship is well tended).

Conclusion

As attorneys both in-house and in private practice navigate the challenges and opportunities unique to the ever-evolving legal and business framework, the blurring of the traditionally defined distinction is expected to continue. And, while the differences between the roles are important in appreciating the merits of each form of practice, the future-looking counselors will wisely evolve along with the framework, seeking to develop enduring attorney-client relationships by also intentionally looking for the commonalities.

Endnotes

1. Stephen E. Davis, House Counsel: The Lawyer with a Single Client, 41 A.B.A. J. 830 (1955).

2. Mark A. Cohen, Law Is Lagging Digital Transformation—Why It Matters, Forbes (Dec. 20, 2018), https://www.forbes.com/sites/markcohen1/2018/12/20/law-is-lagging-digital-transformation-why-it-matters.

3. Ari Kaplan, An Inside Look at What In-House Leaders Want from Law Firms and How to Achieve It, Presentation at the Association of Legal Administrators (ALA) 2019 Annual Conference & Expo (Apr. 15, 2019).

4. Ben W. Heineman Jr., The Rise of the General Counsel, Harv. Bus. Rev. (Sept. 27, 2012), https://hbr.org/2012/09/the-rise-of-the-general-counsel.

5. Faiz Siddiqui, Internal Data Shows Uber’s Reputation Hasn’t Changed Much Since #DeleteUber, Wash. Post (Aug. 29, 2019), https://www.washingtonpost.com/technology/2019/08/29/even-after-ubers-ipo-long-shadow-deleteuber-still-looms.

6. Jeff Kruse, A Day in the Life of In-House Counsel: Managing Legal Issues and Meeting the Expectations of Multiple Internal Clients, Kruse Consulting & Disp. Resol. (Apr. 30, 2019), https://www.kcadr.com/a-day-in-the-life-of-in-house-counsel-managing-legal-issues-and-meeting-the--expectations-of-multiple-internal-clients.

7. Cathy Landman & Margo Wolf O’Donnell, The Modern Partnership: In-House and Outside Counsel, ACC Docket (Aug. 21, 2019), https://www.accdocket.com/articles/the-modern-partnership-in-house-outside-counsel.cfm.

8. Tim Baran, Law Firms vs. In-House Counsel in a Changing Legal Environment, Rocket Matter: Legal Productivity (July 20, 2015), https://www.rocketmatter.com/featured/law-firms-vs-in-house.

9. David Lat, Perspectives from In-House Counsel: Answers to 5 FAQs from Outside Counsel, Above the L. (May 9, 2018), https://abovethelaw.com/2018/05/perspectives-from-in-house-counsel-answers-to-5-faqs-from-outside-counsel.

10. R. Peter Fontaine, Law Firms Are from Mars, In-House Counsel Are from Venus, Value Drivers, LLC (Oct. 14, 2015), https://www.valuedriversllc.com/single-post/2015/10/15/Law-Firms-Are-From-Mars-InHouse-Counsel-Are-From-Venus.

Entity:
Topic:

Kim Boyle is senior counsel at Richard Law Group in Dallas, Texas. She focuses her practice on trademark and copyright prosecution; brand protection and enforcement and litigation; and IP-related licensing, contracts, and commercial transactions.