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CCCA62_010.qxd:CCCA_V1No2_Dept-CourtLeg-V1.qxd 09/14/2007 02:10 PM Page 10 Outside Counsel Hard line or soft pedal? Three key elements of outside counsel guidelines. any law departments send their who manages outside counsel might Mlaw firms a set of guidelines. strike a different balance. Those guidelines typically cover gener- al points about the relationship between 2. Enforced guidelines or the law department and the law firm in laissez-faire guidelines. such areas as billing, expenses, staffing, Some general counsel take a hard publicity and others. Three particular line and insist that the managing partner of with its outside firms, but leaves the imple- choices regarding guidelines are the the law firm sign the guidelines,to indicate mentation details to be fashioned by the topic for this month’s column. that the firm will comply with them. lead lawyer. It doesn’t dive into the details Others insist that the guidelines be circulat- and spell out every alternative; rather, it 1. Hard-wired positions or ed among the partners in the law firm who states the basic operating premises. situational contingency. work on matters for that company.Another Other law departments have created One choice a general counsel makes about form of enforcement is to build into the detailed compendia, as many as 25 pages, outside counsel guidelines is whether to guidelines punishments for non-compli- in which they specify in detail the treat- bake into them specific requirements and ance — for instance, if the law firm does ment of every kind of disbursement. Or terms, or whether to leave many decisions not submit its bills in a timely fashion and they lay out all sorts of rules and guide- to the lead inside lawyer who is responsi- in the required format, the law department lines for when and how a law firm can ble for the matter. will take a percent or two off of the bill. address media inquiries. Some of these For example,a guideline might mandate A contrary view is held by those who detailed guidelines, which remind me of that all law firms will provide a 5% dis- see the guidelines as precatory. They are lengthy, interpretive regulations, explain count off their standard hourly rates. Or it meant generally to shape the relationship, step-by-step how and when and with might say that no more than three people stimulate discussion if necessary, and push what content law firms should submit may be assigned to a matter without prior in the direction of a progressive and well- revised budgets. approval of the lead lawyer. Both of those managed relationship. It is outside-counsel This final spectrum of decisions is a hard provisions set out hard and fast rules appli- management with a light touch. one to come down on either side inclusive- cable in all situations. As to these positions, I favour the more ly. In general, my personal preference is for The opposite position sets out general heavy-handed approach.If a law department guidelines to be constitutional,but there are principles that the lead lawyer can apply does not insist on compliance and account- sound arguments in favour of spelling out as appropriate.To return to our examples, ability, why bother to draft and disseminate what is meant by the guidelines, giving the guideline might say that “we expect outside counsel guidelines? Change at law examples,and guiding law firms with speci- discounts from our law firms, but recog- firms will not happen quickly enough with- ficity as to how they should perform. nize that the level of discount varies from out discipline and enforcement. matter to matter and firm to firm under Rees Morrison, the circumstances.”As to staffing require- 3. Detailed rules or broad co-head of law ments, the guidelines might merely say understandings. department manage- that the law firm and the lead lawyer The third axis for thinking about outside ment consulting for will decide on the appropriate staffing for counsel might be characterized as the“con- Hildebrandt the matter. stitutional” school of thought compared to International, hosts In general, I favour the stronger and the “regulatory interpretation” school of the blog www.LawDepartmentManagement. more specific positions, because otherwise, thought. By this I mean that the guidelines typepad.com. He can be reached at ISTOCKPHOTO.COM the law department might not achieve its might set out a few general principles for rwmorrison@hildebrandt.com or objectives, given that each inside lawyer how the law department wants to work (732) 560-8888. 10 CCCA Canadian Corporate Counsel Association FALL 2007