How can you better win in-house corporate lawyers to your law firm as clients? Try and understand the key challenge faced by in-house legal departments, and demonstrate how you can help them to justify their existence by demonstrating their return on investment. Let me explain.
Recently I read an article arguing that there tend to be two main themes in the corporate legal world, the ascendancy of legal department lawyers compared to law firms, and the need to justify these departments’ existence. Ultimately, these two themes dovetail in the sense that most businesspeople within a company have little understanding of or desire to support an internal legal department. This is not to say that they are actively against the legal department, but instead to point out that the value of an internal cadre of lawyers is usually not readily apparent.
A good example comes to mind: once I sat down with the president of one of the divisions I supported at a major client. This was quite a successful division, generating over seven hundred million dollars a year in revenue. I asked him what his number one concern was when interacting with attorneys. He said that he couldn’t understand why, on many matters, the company engaged outside law firms when they already had in-house lawyers. While he would grant that there are a few specialized areas where this made sense, his chief complaint was that we often engaged outside lawyer law firms on matters that the in-house ones understood how to handle. As a result, this created an extra level of bureaucracy, requiring him to communicate through the in-house lawyer to the outside law firm, playing a game of “telephone” that resulted in miscommunication and inordinate delays. Given the size of his division’s budgetary resources, he couldn’t understand why the company wouldn’t just let him engage an outside lawyer directly.
I noted that an in-house attorney can help with managing a matter, making decisions as to which direction to go using experienced legal judgment, and could reign in unnecessary work which reduces legal fees. He responded that, often times, even overly expensive legal fees paled in comparison to lost business opportunities caused by communication delays. He added: because there was no return on investment system to measure the added value of the legal department, there was no way to agree or disagree as to whether superior legal decisions and lower fees were achieved. This is a compelling response.
A story like this one makes me think that a key way for law firms to win large corporate client business would be to break this “lawyer, law firm” miscommunication and excel at smoother processes which will allow legal departments to demonstrate a better return on investment.