7 Ways To Make In-House Lawyers Happy

Earlier this week, I attended a Legal Marketing Association Ohio conference, "Perfect Your Pitch," featuring six in-house lawyers:

• James D. Campbell, Senior Counsel – Litigation and Claims, Big Lots!
• Ria Farrell Schalnat, General Counsel and Director of Intellectual Property, Vora Ventures
• Mark G. Stall, General Counsel, Escort Inc. and Cobra Electronics Corporation
• Peter Jurs, Vice President and Legal Counsel, Fifth Third Bank
• Robert Horner, Vice President, Corporate Governance and Secretary, Nationwide
• Fred Stein, Senior Vice President and General Counsel, Redbox

The group shared useful insight into what we should be doing to make them happier and get more work. Some observations (in no particular order):

1. In-house lawyers want meaningful relationships with outside counsel. For the in-house people who sat on the panel, it's all about the relationship. They won't give work to people they don't know, people they just met, people who haven't spent the time and effort to get to know them and their company. One panelist said that two years is the minimum amount of time necessary for a relationship to develop into work for the outside lawyer, and that ten years is probably more realistic. That might be a bit extreme, but the point is that they want to work with people they know and like, so the better your relationship, the more opportunities you will see.
2. They like free stuff. All of the in-house lawyers were in agreement that they appreciated lawyers who give them free stuff: forms and checklists, ideas and suggestions, introductions to potential customers, etc. Doing so demonstrates that you care, that you're willing to invest in the relationship, that you're the kind of lawyer they'll want to have on their team. It gives you a chance to "audition" for more work and, most importantly, it opens the door to reciprocity: additional work, referrals, and the like. It was clear that most of the in-house lawyers who spoke have to operate on limited budgets with fewer people than they need, so becoming a "knowledge source" is a great way to stand out as you help your clients get smarter and do their jobs better.
3. They require transparency. All of the panelists talked about the importance of transparency at one point or another. A pet peeve was outside counsel who blew through a budget without telling anyone, instead sending a bill for twice the amount. That isn't to say that firms must stick to expected costs for unpredictable work (think litigation), but rather that they want their lawyers to keep them in the loop when fees start to exceed the budget. They recognized that it's not an easy phone call to make, but were clear that it absolutely had to be made for the relationship to continue and grow.
4. In-house counsel is always interviewing other lawyers. Like all of you, in-house lawyers attend seminars, conferences, social events, and the like. They talk regularly to other providers, and they meet people they like and want to work with. That's a given. For you, it means always taking that extra step, making your clients happy, asking them what they want and then delivering it. But it also means that you're only as good as your last piece of work, and that your client relationships are always at risk.
5. They're struggling to please their own clients. Several times during the day each of the panelists referenced his or her own clients: the CEOs, executives, Boards, etc., to whom they all report. Those clients are just as demanding as yours and, as one speaker pointed out, the risks are much greater for the in-house lawyer who doesn't make her clients happy. Another said (and said again) that he wants his outside lawyers to ask him how those clients are doing every time they're on the phone together. The bottom line? Knowing who your clients report to and how they're being evaluated can make or break a relationship.
6. They're tired of Alternative Fee Arrangements. "Alternative fees are a race to the bottom where associates are getting squeezed." That's a direct quote from one of the panelists, who said that getting work "on time, on spec, and on budget" was better than an alternative billing arrangement. It's not that they're wedded to the billable hour, but rather that they have learned that AFAs do not always mean lower costs – or greater efficiency – so they are understandably skeptical when outside lawyers pitch alternative fees. We should instead be creative in developing billing agreements that are win-win and that allow both sides to benefit from technology and other delivery improvements.
7. They don't like staleness. From the panelists' perspective, outside counsel should always be improving the delivery of legal services, the relationship, the quality of work. One in-house lawyer called it CQI: Continuous Quality Improvement, and said that he liked lawyers who kept the relationship dynamic.

Who are we fooling?

That darn billable hour. Evan Chesler, Cravath’s presiding partner, reiterated his opinion of it this week in the NY Times: “This is the time to get rid of the billable hour.” Cries for its eradication are burning up the blawgosphere. There is even a law blog, The Client Revolution, entirely devoted to "casting aside the legacy systems." 

In case you don’t remember, I defended the billable hour a couple of weeks ago. The hourly billing method certainly is not without drawbacks, but it remains a fairly efficient way to compensate lawyers for their work. Of course there are lawyers who pad their hours, who focus on the doing rather than on the result, who work day and night in the relentless pursuit of 2400 hours/year of client work. 

But do you think those lawyers are going to go away or stop overcharging clients or stop wasting their clients’ money when the profession moves away from the billable hour? That the new billing methods will be completely transparent, that cost will reflect value, that no client will ever again wonder if she got her money’s worth? Who are we trying to fool? Someone will always find a way to exploit the weaknesses of the new system, just as lawyers who provide real value, day in and day out, to their clients -- the clients that aren't complaining -- will always provide value. The way the compensation is calculated changes nothing. If we believe that clients will get better legal advice, make better business decisions and be happier once the billable hour has been eradicated, we’re fooling ourselves. 

The billable hour isn’t the problem. It’s just a smokescreen. The problem is that clients no longer believe they are getting value from their lawyers. How are we going to fix that? 

What's the problem with the billable hour?

As the battle to eradicate the billable hour wages on, I can't help but think that, in spite of all of its warts, it is still a pretty efficient way to compensate lawyers for their work. Yes, it can reward inefficiency. Yes, it emphasizes quantity of work, not quality of work. But isn't frustration with the billable hour a symptom rather than the problem? Does that particular billing method produce a negative impact on the delivery of legal services? Are clients getting bad work because of the billable hour? I cannot imagine a situation in which that were true (but welcome correction). 

Isn't the real problem one of value, trust and service? When clients say they are unhappy with the billable hour method, aren't they saying they feel like they're paying too much for their legal services? That the perceived value of those services does not equal the cost they've been asked to pay? Legal services have to be paid for, and by-the-hour is a reasonable way to do it until you think your lawyer spends unnecessary time on your matter, or charges too much for her time, or isn't telling you the truth when she says it will take 20 hours to resolve your problem. And if that's the case, then the billable hour isn't to blame.