February 22, 2017 Articles

The Power of Partnering: Guidelines for Diverse Collaborations among NAMWOLF and Majority Law Firms

By Stephanie A. Scharf, N. Nate Saint Victor, and Antonio C. Castro

For many corporations, diversifying outside counsel teams has become a priority. That goal, however, quickly meets up with the reality that to obtain the services of senior women and minority lawyers, companies will need to do more than hire Big Law firms. Big Law has not yielded the number of experienced diverse lawyers that corporations are looking for—and will not anytime soon. Indeed, if firms continue to grow their women and minority equity partnership ranks at the current rate of 1 percent a year, it will take until 2045 for firms to reach gender parity at the equity level—and longer to reach parity based on race and national origin. Nat'l Ass'n of Women Lawyers, Report of the Ninth Annual NAWL Survey on Retention and Promotion of Women at Law Firms (2015).

One potential solution is increased use of firms that are members of the National Association of Minority and Women Owned Law Firms (NAMWOLF), a number of which are led and largely staffed by former Big Law partners, Assistant U.S. Attorneys, federal court clerks, and high-level members of corporate law departments. Their credentials, experience, judgment, and ability certainly rival those of partners in majority firms.

At the same time, we are aware that NAMWOLF firms are not always top of mind when any given corporation considers outside counsel for a major matter. The reasons vary. In some instances, corporations have found it difficult to identify and vet appropriate firms. There is a reluctance to try out firms that are not known, especially in an era when even small matters are scrutinized for the quality of the result. Inside counsel are evaluated on the basis of results. When a matter is handled by a well-known large firm and it does not go as well as desired, it is safer to be able to say, "We hired a big firm." Some companies hold the view that a large matter needs lots of lawyers and necessarily send the client to a large firm.

The Case for Collaboration
The benefits to such collaborations can be substantial. It has become well recognized that diversity imparts value to the results of business activities, including legal matters. Indeed, in this day and age with women making up roughly 35 percent of the legal profession and lawyers of color making up some 15 percent of the profession (Bureau of Labor Statistics, Current Population Survey, Household Data, Annual Averages, 2015), ignoring diversity means excising a large chunk of legal talent from client matters. Yet, while diversity within the legal profession as a whole has increased, the nation's largest firms have, overall, struggled to advance a meaningful number of women and minority lawyers into lead positions. And while NAMWOLF firms are clearly diverse, the size of even a large NAMWOLF firm pales compared with the size of AmLaw 100 or 200 firms, which many clients view as the greatest impediment to retaining a NAMWOLF firm on large litigation and corporate matters.

The collaboration guidelines presented in this article, including the Checklist for Collaboration among NAMWOLF Firms and Majority Firms at the end of the article, provide models and procedures for the most effective working arrangements. By using the approaches described, clients will have the advantages of retaining highly qualified and deeply experienced women and minority lawyers on major matters, combined with the benefits of working with large majority firms. NAMWOLF firms will benefit through work on major matters for which they might not ordinarily be considered because of their size.

Many businesses and law firms have come to understand the value of diversity. Some of that understanding flows from data about businesses. The financial returns of companies with three or more women on the board outperform companies with all-male boards by 60 percent, looking at return on invested capital, 84 percent in return on sales, and 60 percent in return on equity. Catalyst, Bottom Line: Corporate Performance and Women's Representation on Boards (2004–2008) (Mar. 1, 2011). A 2015 McKinsey & Company report shows a similarly positive impact:

  • Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.
  • Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
  • Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set—that is, bottom-quartile companies are lagging rather than merely not leading.

Vivian Hunt, Dennis Layton & Sara Prince, "Why Diversity Matters," Jan. 2015 (article adapted from McKinsey & Co., Diversity Matters (Feb. 2015)).

Diverse teams perform well along a number of dimensions. With respect to problem solving, for example, one study concluded that on almost every measure, racially, ethnically, and culturally diverse workplace teams function more effectively than homogenous teams at solving problems—even better than teams whose individual members are uniformly "smart." Deloitte, Only Skin Deep? Re-Examining the Business Case for Diversity (Sept. 2011). One explanation is that teams with members from diverse backgrounds, experiences, and perspectives avoid "groupthink," whereas non-diverse teams often approach problems from a unilateral perspective. As a team of well-known researchers wrote, if the goal "is to be accurate and objective," then diversity trumps homogeneity in its power to reach that goal. Evan P. Apfelbaum, Katherine W. Phillips & Jennifer A. Richeson, "Rethinking the Baseline in Diversity Research," Persp. on Psychol. Sci., May 6, 2014. In summarizing decades of multidisciplinary research, a prominent researcher concluded:

The fact is that if you want to build teams or organizations capable of innovating, you need diversity. Diversity enhances creativity. It encourages the search for novel information and perspectives, leading to better decision making and problem solving. Diversity can improve the bottom line of companies and lead to unfettered discoveries and breakthrough innovations. Even simply being exposed to diversity can change the way you think. This is not just wishful thinking: it is the conclusion I draw from decades of research from organizational scientists, psychologists, sociologists, economists and demographers.

Katherine W. Phillips, "How Diversity Makes Us Smarter," Sci. Am., Oct. 1, 2014.

The Virtual Firm Model
As background for these guidelines, we note that on certain litigation and corporate matters, some clients have teamed two or more majority firms, thereby forming a "virtual firm" to serve client needs. The virtual firm model is best known in the context of large national mass tort litigation, whereby each law firm is responsible for a given area of the litigation defense with ongoing coordination about strategy and goals at the senior partner level and with oversight by the client. The plaintiffs' side of the bar has also developed collaborative models. When pursuing major litigation, most plaintiffs' firms effectively join forces to work together on a matter against a corporate defendant.

There are many possible variations on the virtual firm or "collaboration" model, whether the context is class action defense, insurance coverage disputes, complex commercial disputes, white-collar investigations, mass torts, mergers, bankruptcy proceedings, and more. In the transactional context, for example, there can be one firm responsible for driving the core components of the deal while other firms may be responsible for the labor due diligence or regulatory due diligence or the intellectual property aspects of the transaction. Indeed, we view the virtual firm model as applicable to any engagement that would benefit from the talent and differing perspectives available in two or more law firms.

A collaboration may be suggested by the client, the majority firm, or the NAMWOLF firm, so long as the engagement plainly serves the client's legal needs and the client is firmly in favor of it. Identifying participant firms can come from a variety of sources—through client networks, majority firm suggestions, and recommendations by NAMWOLF firms. We have seen successful models started by all three players (although to date it has been most common for a client to suggest a majority firm/NAMWOLF collaboration).

Any collaboration begins with some ideas about how the collaboration would work. Here are a few "true life" examples:

1. A majority firm specializing in mergers and acquisitions collaborated with a NAMWOLF firm on the acquisition of a large business unit being purchased by the client from a competitor. The NAMWOLF firm was responsible for the litigation due diligence and antitrust due diligence, while the majority firm handled the other aspects of the transaction. The client selected the NAMWOLF firm because its litigation and antitrust lawyers were highly experienced. The fact that the two firms' areas of responsibility were clearly defined led to an efficient and smooth working relationship. The two firms were in regular communication, and the collaboration was well managed on that basis.

2. A mid-sized majority firm specializing in class action litigation collaborated with a NAMWOLF firm in defending a class action. The NAMWOLF firm also had good class action experience and the added benefit of a strong local presence. The two firms worked jointly on pleadings. The large firm managed all of the written discovery and production of documents. The firms took and defended depositions of fact witnesses and experts, with each firm assigned to particular fact areas. Briefs were drafted by one firm with input from the other. The lead lawyer at hearings was from the firm that took the lead on the briefing. The firms met at least biweekly by telephone on case strategy and ongoing projects. Over time, the lawyers developed the same type of collegial and respectful working relationships that each had within their firms. The collaboration also worked well because there was meaningful work available to both firms, not just the majority firm.

3. A large toxic tort matter was staffed with three firms. One firm was responsible for developing both the corporate defense and the expert defense regarding the history of contamination at the property. This firm was also overall in charge of the strategy for the litigation. A second large firm was responsible for all written and document discovery. The NAMWOLF firm was responsible for developing the expert defense on medical issues. The firms met three times a year with the client and had frequent communications with each other. This is an example of a collaboration that worked well because of good client oversight and a clear understanding as to the roles that each firm would play.

4. Some clients have encouraged that for litigation matters, local counsel roles should be filled by NAMWOLF firms. That is potentially an excellent role for a NAMWOLF firm. For example, an effective collaboration could have the NAMWOLF firm responsible for jurisdiction-specific motions and hearings; or the NAMWOLF firm could be responsible for all local discovery. The danger to be avoided is for the NAMWOLF firm to be little more than a mail drop, with virtually all meaningful work taken by the majority firm.

Collaborative engagements work well in the following circumstances:

  • the lawyers in collaborating firms respect the quality of work and quality of all the lawyers on the team;
  • the focus of each firm is on getting the job done at the highest level of quality and efficiency;
  • each firm appreciates that it is not best positioned to do all of the work on the matter, and all participating firms have meaningful work;
  • the assignments given to each firm are understood by all the players to be appropriate for each firm; and
  • the client strongly encourages a successful collaboration through his or her words and actions.

Shared Responsibilities
From the earliest stage of the collaboration, it is essential for firms working on a matter to have a clear understanding with each other and with the client about the roles each firm will play and reporting relationships. Client involvement is usually key. Otherwise, uncertainty regarding the roles that each firm will play can become counterproductive or an impediment to effective management and to the collaboration itself.

Although successful collaborations may exist upon merely a verbal agreement or understanding, with a writing there is much less chance of misunderstanding and disappointment about which firm has responsibility for given areas of work. Even a simple one-page "bullet outline" can articulate the overall goals, law firm roles and areas of work, communications between firms, and contact with the client.

We emphasize that each collaborating firm should have a meaningful role, even if the work is not evenly divided. On the other hand, firms may have shared responsibilities, either because the assigned areas of work overlap or firm personnel are fully integrated into subject matter teams. The parties should consider implementing mechanisms to ensure that the NAMWOLF firm is not drowned out of the collaboration. Where a NAMWOLF firm is paired with a majority firm, for instance, it is critical that the NAMWOLF firm have client contact to ensure meaningful participation in the collaboration. Also, in consultation with the client, the collaboration can agree that a minimum percentage of the work done should be done by the NAMWOLF firm to ensure a consistent correlation between the firms' respective workloads.

Teamwork
There is another key factor in successful collaborations: the ability to work well with lawyers outside one's firm. We are aware that pressures inside firms, especially in Big Law firms, for lawyers to have greater billings, more obvious matter responsibility, and direct client communication may undercut any given lawyer's willingness to share work and responsibility with lawyers from another firm. Some firms have a culture that focuses on the value of teamwork while others may be so internally competitive that it is hard to imagine they would work well in collaboration with other firms. A collaboration, however, is not the place for hidden agendas. Nor should use of the NAMWOLF firm default to "window dressing," where the NAMWOLF ends up doing only low-level, routine tasks. That model does not take advantage of the talent in a NAMWOLF firm or its cost efficiencies, and it also demeans the value of diversity.

Collaborations work best when there is a true commitment to working as one team and an appreciation that the whole is more than the sum of its parts. While we are not naïve about all of the potential dynamics, we firmly believe that any such concerns can be overcome by straightforward discussion, ideally with all team members, about the value of the collaboration and the expected long-term benefits for all of the participating lawyers.

Communications and Management
From the outset of the collaboration, it is important to set out the framework for communication among the firms and also with the client, including how key strategic decisions will be made. Each firm should designate a senior team leader, who will be part of the decision-making/strategy group in communication with the client. Stakeholders to a collaboration should evaluate the right amount of contact among them. The parties should establish a frequency of reporting that does not unnecessarily burden any party, particularly the client, but that offers the transparency and ability to communicate that is necessary for an effective partnership. Parties will need to be flexible to adjust as necessary for the most efficient approach.

It is our experience that an effective collaboration between firms typically requires active management at least by the firms themselves and frequently by in-house counsel. Client and firms need to discuss up front the level of client involvement and client expectations for how the firms will work together. As one example, in a three-firm collaboration, where each firm was assigned to a particular aspect of a multifaceted litigation with many fast-paced moving parts, the client met weekly with the three lead lawyers. No substitutions were permitted—the lead client and the lead lawyers had to be on the call. This weekly call ensured that the client and its counsel could express their views about the substance of the work and necessary next steps and quickly address any loose ends or issues.

Ideally, decision making should be collaborative, and that is often the case when firms share common approaches to strategy and tactics. By "collaborative" decision making, we do not mean that every lawyer at every level needs to agree with a given decision. Just as there is a hierarchy of decision making within a firm, so we anticipate a similar hierarchy of decision making in a team of two or more firms. Certainly, when there are major differences in strategy or tactics, the designated leader from each firm should be able to articulate the value of a given approach.

Ultimately, of course, the client should make the decision—just as a client would make a decision about the pros and cons of a given strategy or tactic even when represented by one firm. Alternatively, depending on the circumstances, a given law firm may be designated as lead counsel, responsible for case strategy and the assignment of tasks and responsibilities for all attorneys participating in the case. With that structure, of course, it is important to maintain regular feedback among firms and with the client. At the completion of the assignment, all parties should check in with each other and the client to assess the partnership and best practices for any future collaborations.

With all of the foregoing factors in mind, we set forth below a checklist for collaboration among NAMWOLF firms and majority firms, to provide in a simple format the recommended procedures for a successful collaboration.

A Checklist for Collaboration Among NAMWOLF Firms and Majority Firms

1. Initiating the collaboration

  • Choose outside counsel firms. List why each selected firm was chosen—for what capabilities.
  • Confirm that the client and the outside counsel firms share the same understanding of the value that each firm brings. State which particular persons have communicated that understanding, and to whom.
  • Set an early date for the client and key lawyers from each firm to meet in person at the beginning of the engagement.
  • When staffing any matter, outside counsel should strive to ensure their team of lawyers is diverse.

2. Structuring the collaboration

  • Identify which specific client representative is in charge of overseeing the engagement. Identify the areas of principal responsibility and of support work for each firm.
  • Identify which firm partner is in charge of overseeing the collaboration of his or her firm's work. Identify who will have ultimate decision-making authority on the matter in a given area and who will have overall decision-making authority for the matter as a whole.
  • Determine how the client will assess the value of each firm's contribution. Will it be a combination of quality of work, timeliness, specialized knowledge, cost, or other factors?

3. Ongoing communication

  • Determine how often the lead lawyers from each firm will meet (at least by telephone) with the client.
  • Set regular times for meetings and required attendance by each firm.
  • Determine that the frequency of meetings is appropriate for the nature of the matter.
  • Determine who will provide a written agenda for meetings, which sets out strategy, ongoing tasks, and assignments to firms.
  • Determine how often the outside firms meet (at least by telephone) to discuss ongoing activities.
  • For fast-moving matters, hold quarterly in-person meetings with the client.

4. Client check-in

  • Determine when the client will "check in" with each firm about how the collaboration is proceeding.
  • Determine if the client will solicit "360" views of how management by the client is proceeding.

5. Midterm/end-of-engagement review

  • For longer-term engagements, set a date for in-person or midterm review. Conduct end-of-engagement review and lessons learned.

Keywords: litigation, minorities, law firm collaboration, National Association of Minority and Women Owned Law Firms, big law, small firm


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