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In-house Division

How to build effective in-house / law firm relationships

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Getting and keeping a corporate client is a lot like the dating game – you have to make your choice, get picked, and keep communicating and giving to keep the relationship going. Diana Bentley offers some tips for finding – and keeping – your perfect partner

 This article was first published in the November 2013 edition of Managing for Success, the magazine of the Law Management Section

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Over one-fifth of individuals with practising certificates work in-house, according to the latest research from the Solicitors Regulation Authority (SRA), the largest group being in the private sector, followed by those working in public bodies. Of more than 200 employers interviewed as part of the research, most viewed their legal services department as a growth area. And while in-house departments have swelled, the nature of their practice has also changed.

Made for each other

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“We’re looking for excellence in how firms do the work, but we want to see indications that they’re trying to understand what we do, and they need to be clear that they’d like to work with us.”

Richard Tapp, Carillion plc

“As in-house departments have proliferated, in line with the American model, they’ve become a more significant part of corporate executive teams, but also subjected to the same budgetary and performance strictures as other departments, so they’ve had to become more sophisticated about how they purchase legal services,” says Julia Chain, formerly managing partner of Garretts, general counsel at T-Mobile, and now managing director of consultants Huron Legal. Regulatory pressure on big businesses has also increased the scrutiny under which they place their legal suppliers. Natalie Jobling, Network Rail’s corporate general counsel, explains: “We’re in a heavily regulated business and must operate efficiently and expect our firms to be the same. The entire legal function for the organisation must represent good value for money.”

Meanwhile, law firms’ relationships with in-house teams has also altered dramatically, partly because of who they have that relationship with – no longer just legal teams, but procurement teams, too. Judith Prime, managing director of business development at CMS Cameron McKenna, explains: “Once we’d have to tell legal teams how much they’d spent with us as they didn’t know. Now we’re helping procurement managers with reporting and performance measurement and there’s more rigour in managing the relationship.” Jobling says the company’s procurement team brings real benefits in “creating models of fee structures and negotiating fees and making assessments”.

So what do the experts say about how firms can gain work from in-house teams and sustain successful, long-term relationships with them in these times of change and increased competition?

Putting yourself out there

Winning in-house work can be a challenge for any firm, but perhaps especially small to medium-sized ones, for whom reputation and personal contacts remain a mainstay of attracting work. “We don’t do much marketing. Most of the firm’s work comes through doing work well and being spoken of well,” remarks Michael Sippitt, chairman of Clarkslegal of Reading. “About half our work is employment-law related, and it’s good to be seen as one of the best providers in the field.”

However, legal departments are increasingly requiring law firms, large and small, to participate in a formal tender (either open or by invitation) or pitching process to secure their work. For bigger firms with greater resources and larger clients, tendering is already part of life. “Many clients are reducing the size of panels, so tendering is a significant part of our efforts to get and retain work. Here, there’s always five or six people working on them full-time,” says Prime. And as tendering has become more established, the process has become more rigorous, with departments using online tenders and often grading responses to parts of written tenders.

The demands of the tendering process mean it is essential for firms to be sufficiently selective about determining which tenders they wish to join, and realistically assessing their likelihood of success. Paul Marmor, a partner of Sherrards Solicitors, urges appropriate caution. “We rarely participate in tenders where we have no previous link to the organisation – we’re usually invited to take part,” says Marmor. “Tenders are a big investment in time and effort for firms like ours. Having said that, good firms always watch out for what’s on offer and many corporations are moving away from just using large firms, especially for some specialised work.”

Understanding the client’s business is a key factor in deciding whether to take part in a tender or not, argues Sippitt. “If we don’t know the sector, we’re less inclined to tender for their work – although with some specialities, like employment law, understanding the business can be less vital, as the discipline spans many sectors. You must assess how important it is that you understand the business as well as the law around it. Lawyers shouldn’t work in a vacuum and are part of a client’s problem-solving team.”

Making the first move

In the tendering process, legal excellence is not enough. Consultant David Newton, who spent many years as in-house counsel with a large financial institution, says helpful questions to address when researching a client include what the client’s key business objectives are, what its risk culture is, what challenges it faces, and who are its competitors. Prime agrees. “To be successful, you must understand what the purpose of the tender is and what the client’s drivers are. That informs how we respond to them.”

Newton also advises finding out how the potential client’s instructing businesses and legal departments are resourced, in order to establish potential pressure points and the client’s likely need for future support. “Firms should try to understand where and when legal work will be required and what the peaks and troughs in volumes may be,” he says. Marmor, meanwhile, indicates his firm concentrates on its own resources and whether it can really deliver. “You must attend well to detail, research the client, and care about the organisation, its ethos and way of doing things and decide if you can have an affinity with them,” he says.

Richard Tapp, company secretary and director of legal services at Carillion plc, a multinational construction services provider, assesses firms’ capability and resources, but also wants to know they can work collaboratively. “We look at things like whether firms share our values, how responsive they are, their reputation, and whether we can afford them. We rarely work on hourly charges.” He reviews the panel that supports his global team of 30 lawyers every three years. Currently, he has a panel of 12, ranging from a large corporate firm to regional firms – including Clarkslegal.

Network Rail’s legal team, which has just reduced its panel from 12 to five main firms, is also looking for a wide range of skills and attributes in the firms it uses. Jobling comments: “We want our advisers to represent value for money and share our values. We also want them to be an extension of our legal team in strategic and commercial thinking, so those who succeed in our tenders demonstrate that they understand the needs of our business and legal team best.”

Belonging to schemes like Lexcel, the Diversity Challenge and Investors in People may also be well received by clients who are increasingly being held to account on a variety of social and managerial matters. Tapp’s department has been Lexcel-accredited for about seven years. “This underscores our credibility in-house. If the rest of the business is regulated, why shouldn’t we be?” he argues. “We could use the ISO 9000 standard, but because Lexcel is tailored to legal services, it’s more appropriate for us and brings rigour to how we organise ourselves.” Tapp would like all the firms he uses to be Lexcel-accredited, but since not all will be, his company’s tendering process now asks firms both if they are, or, if they’re not, why not and what else they are doing to ensure robust practice management. “Some say they already use comparable processes, but getting a good response on this is helpful.”

When actually completing the tender documentation, Tapp emphasises the need to follow instructions carefully. “A surprising number of firms don’t do what is asked of them in a tender. Many don’t provide specific answers to questions – we don’t want marketing material. If they’re not clear in their answers, we’d ask what they’re like at communicating generally. We’re also clear in protocols, for example, about wanting regular case assessments in litigation. If a firm says it can’t do them, they may not be for us.” And make sure you get the right people to complete the documentation, insists consultant Pippa Blakemore of the PEP Partnership LLP. “People with other disciplines can be useful, but the depth of a pitch must come from lawyers who’ll be doing the work and understand it,” she says.

Speaking up

Presentations are the next hurdle for firms which pass muster on written submissions. Blakemore advises firms to rehearse well and choose an appropriate team. “It’s tempting to use your firm’s successful rainmakers in presentations. However, general counsel increasingly want to meet those who’ll be directly responsible for their work, rather than lawyers who are good in ‘beauty parades’,” she advises. Chain, too, urges firms to select people who can create a good relationship with the client. “If you’re bidding for the work of a young, high-tech company which has many staff from ethnic minorities, don’t send in a team of all 50+ white male solicitors. A woman general counsel once complained to me that a presentation team didn’t include one single female.”

Tapp usually wants to see the fee-earners who will be doing the work, and confirms that though some lawyers are not good presenters, his team can see beyond that. Some firms, he reports, can make an entire presentation without mentioning the corporation’s name and talk only about themselves. “We’re looking for excellence in how firms do the work, but we want to see indications that they’re trying to understand what we do, and they need to be clear that they’d like to work with us,” he says. Non-lawyers are often involved in presentations too – on both sides. Members of Carillion’s operational teams attend presentations and Prime often includes people from CMS Cameron McKenna’s support teams – like e-billing specialists and relationship managers – where appropriate.

Finally, firms must be prepared to develop or respond to case studies – either in the written process or during the presentation – to prove their points. In Network Rail’s latest tender, participants were asked to advise on a given scenario and indicate how they would staff and handle the matter, not concentrating on legal issues alone.

Making it work

Winning the business is, however, only the beginning. Newton advises firms to measure their expectations at the start of the process. “Doing lower-profile work can help you build up your reputation while strengthening your understanding of the client’s business. Think about how you’ll approach any setbacks in the relationship, and don’t allow complacency to set in. Above all, ensure that you have the right people with the right technical and personal skills working alongside the client.”

To be kept on, law firms must also nurture and maintain the relationship with legal departments. That means determining what sort of relationship is expected; some clients may want routine services provided, while others want real business partners. Good communication is vital and is a two-way process. Firms should not wait for complaints to surface, recommends Blakemore. “Be proactive and ask your clients about your performance – what things went well in a transaction, what could be changed to achieve greater effectiveness. Requesting feedback and acting on suggestions throughout ongoing relationships will enhance and strengthen them.”

Maintaining the position as a selected advisor is also demanding. Twice-yearly, Tapp’s department formally reviews the work of Carillion’s panel firms, with each firm being scored by everyone in the business who has used it. All firms are invited to a biannual network meeting, to be briefed on developments in Carillion’s business. There are separate meetings twice a year for panel firms to brief Tapp’s team on developments in the law and any innovations in handling matters which could help his team. Network Rail’s legal department has a relationship manager for each panel firm, and all firms are bought together for an annual meeting. Training is undertaken both ways. The department also uses an extranet for everyone in the legal department and in panel firms, to aid communication.

Many firms also go above and beyond by providing support services to client departments, including seminars, secondments and bespoke training, as a key part of relationship building. Prime explains: “Clients now often want you to be a proper account manager and manage a range of resources for them. Some clients may want a 24-hour crisis management hotline manned by our lawyers, which we’ll do.”

Marmor says his firm works hard on the interpersonal relationship, and tries to understand what in-house teams need to help them perform their role properly. “We try to facilitate business introductions for clients. Things like that are appreciated. Clients also like to think they can turn to you for advice and not always be charged.”

Staying together

So what of the future? The configuration of the work and relationship may well change further, offering yet more challenges to law firms. “Clients will be looking to see who else can provide legal services – especially for routine work,” predicts Chain. “General counsel will be looking for a suite of services. Some law firms will become more project managers, offering a range of ways to get the work done and overseeing it all.”

Jobling expects her department will only handle matters that really add value to the business. “It may be cheaper to send the work out for a fixed fee. At the other end, there’ll still be a place for firms to help with really large, specialised transactions.”

Tapp believes more work will be done in-house and more work will be provided by organisations that aren’t traditional law firms. “There’ll probably be less work for firms. But we’ll still view our relationship with the firms we work with as a long-term business partnership relationship,” he says.

If you want to know more…

…. about working with in-house lawyers, or if you are in-house, the Law Society can help. Lexcel, our practice management accreditation scheme, is a favourable requirement in any tendering process. The Diversity Charter gives law firms and in-house legal departments the chance to publicly commit to developing and implementing best practice in equality, diversity and inclusion; it is underpinned by a procurement protocol which encourages clients, also including in-house departments, to seek legal providers who meet standards on equality. Our In-House Division provides support, updates and advice to in-house lawyers working in both the private and public sectors; membership is free for in-house lawyers. You may also be interested in our recent webinar, ‘Managing external lawyers – the perils and pitfalls for in house lawyers’, available from our CPD Centre at a 20% discount for Law Management Section members, and in our Law Society Publishing book, Outsourcing: Law and Practice. 

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