A roundtable discussion: Bridging the gap between in-house and outside counsel

D. Cameron Findlay, Aon Corp.

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When you first come in as staff counsel, oftentimes you are told, this is your area, here is your client, brief him on the third floor. You are given a stack of files, or I suppose nowadays, e-mails, and you have at it. For me, at this time, that’s the least of what my boss is looking for. The CEO is looking for a business partner who can also keep him on the right side of the ever-changing legal landscape.

Doohan: I think there is a huge difference in the relationship with outside counsel. Coming off of what Bill said earlier, we are really much more concerned about billing practices, and we track, because of computers, hourly rates and what the increases have been. And it’s really astounding how the rates for law firms continue to keep on going, going, going at rates that in-house did not see before. There is a lot more focus on keeping costs down, and having outside firms justify their increases.

Findlay: I guess I would say the other thing I see is the role of in-house counsel has changed from managing a litigation portfolio, reviewing contracts, and so forth, to being almost a quasi-independent gatekeeper for the company. The SEC and other government authorities now look to general counsels and CFOs to essentially go outside their comfort zone, in a lawyer’s case, and raise questions about an accounting issue.

That wouldn’t typically have been something lawyers would have spent much time on [in the past]. And if a lawyer misses an accounting issue like that, sometimes there is an almost strict liability that you knew or should have known that something was wrong. I think being a general counsel is a much more risky, scary enterprise than it was 10 years ago.

Von Hoene: The interesting tensions that develop as a result of the additional obligations that are now on us is that the people we work for, our clients, very much want us to be part of the business.

And as our businesses get more complex, there is a greater and greater need for us to be business people with a legal background rather than being the gatekeeper. You really have to perform a couple jobs in order to be effective for your client, and also discharge those responsibilities, which I agree have become much heavier ones in the last couple years in Sarbanes-land and otherwise.

Bouldon: It can be quite an act to juggle. For example, in my case, I’m included in business forecasting meetings and I’m included in the meetings we have with our board of directors. And after the meetings, the business folks are done. They presented their budgets and did all they need to do. It’s very nearly the end of the day. For the lawyers, what happens is, those meetings conclude, you go back, and now take on your legal role.

Susler: I agree with everything everybody has said. Similarly to what Allyson said, when I went in-house, I was a solo in-house attorney at a small company — starting the department from scratch and battling to make a culture change. Now I’m in a two-lawyer department and in a much larger, much more diverse company. And I’m expected to know the business, and I love learning the business. That is one of the most fun parts about it. The legal aspects of a deal — I’m expected to learn it and learn it very quickly. It is a challenge.

How do you balance your legal responsibilities with your responsibilities to your companies?

Susler: Sometimes you have to do it explicitly and say, ”Look, that’s a business issue and this is a legal issue. I am advising you as a lawyer. You have to make the business decision, but here is the risk and the implications of one decision over another.”

A simple example is, I review a contract. There are often not any legal issues with the contract, but the business implications could be huge. This contract says you have to do business this way. I will ask a businessperson, ”Is this really what you agreed to and can you do that? Because if you don’t, we are in material breach of contract and we will get sued.” You are giving business advice in a legal context.

Bouldon: I agree. You have to be careful because, as you get to know your clients better and get to understand the business better, I think sometimes you know which way they want to go in certain areas, in certain matters, and in certain issues. I find myself still stopping and saying, ”Okay, this is what I think you’re going to want to do. But here are three options or four options or a couple options. Here is what they look like. I think based on our past discussions you are going to want to end up at point A, but let me just get the options out there for you.”

Sometimes the business folks have a high interest in hearing the options; sometimes they have less of an interest. They may have already made a decision. But that’s the lawyer in me wanting to make sure someone put on the table all of the legal options and issues, even though you can pretty much tell that the options may or may not be attractive.

Von Hoene: I think it’s also important to recognize that, within the broad parameter of choices, there are many choices that can have a business rationale, all of which are perfectly legal. Make sure as you deliver messages about what is around the fringe that you are reinforcing and giving a sense of confidence to the clients, that you are not simply so conservative that you are unwilling to be the businessperson in the room.

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