Thursday Thinkpiece : Boddie on Succeeding as Outside Counsel

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by Rod Boddie © 2014 American Bar Association. Reprinted with permission of the American Bar Association. All rights reserved. (ABA LPD 2014)

Excerpt: Chapter 1: Legal Services

To begin the discussion about the provision of legal services, let’s briefly discuss the client who will be receiving these services. When you are retained by a company, it is the company to whom you owe your fiduciary duty, and when defining your obligations toward your client, it is generally the company to whom your rules of professional conduct refer. For purposes of this book, however, the client is not that corporate entity; rather it is the in-house counsel or other corporate officer who is your conduit to the bill-paying entity.[1] These individuals are the ones with whom you will forge a personal and professional relationship. They are the ones who will look to you for guidance, who will rely on your expertise to make their jobs easier, and who will be evaluating you (consciously or subconsciously) throughout the course of the representation. It is ultimately the impression that you make on these individuals that will determine your long-term relationship with the institutional client and that will impact your professional success in the future.

Results-Oriented Services

When a company decides to retain outside counsel, it usually does so with a specific purpose in mind—to win a piece of litigation, negotiate a lease on favorable terms, assist the company in avoiding criminal prosecution in connection with a governmental investigation, file applications to protect the intellectual property of the company, or to handle some other specific legal issue. The goal (for the most part) is clear, and the outside lawyer retained generally has the technical expertise to accomplish that goal. With ample experience in the requisite subject matter, the vast resources of the firm behind him, and a laser focus on the goal in his sights, the lawyer is prepared to plow forward to achieve the desired result for the client.

But should attaining the right result really be outside counsel’s primary goal? Should winning the litigation, for example, be the lawyer’s focus in representing his client? To answer these questions, we need to know what the client wants. While it is clear that attaining the right result is of the utmost importance to the client when retaining outside counsel, the needs and desires of the client go far beyond the result. In the Association of Corporate Counsel’s 2011 CLO Survey (referred to here as the ACC CLO Survey [2]), which surveyed over 1,100 Chief Legal Officers, the CLOs were asked what they would like to see outside counsel do to improve the relationship with, or work done for, their respective legal departments. The top five responses, and the percentage of CLOs who responded in kind, were as follows: [3]


Source: Succeeding as Outside Counsel by Rod Boddie. © American Bar Association 2014


In addition to the five responses above, there were nine specific responses from the CLOs surveyed, none of which focused on results-oriented desires. While the manner in which the survey was constructed inherently has an effect on the outcome, the inescapable truth is that clients expect more from their outside counsel than just getting the right result. Although a favorable resolution of the matter for which outside counsel is hired is important to the client, it is only one of many factors that clients weigh when evaluating the services provided by outside counsel, and it should just be one of many objectives on which outside counsel focuses when delivering legal services.

As evidenced by the responses in the ACC CLO Survey, and as we will see in more detail later in this book, to deliver legal services that satisfy the wide array of needs of their clients, outside counsel must move from a results-oriented approach to a broader experience-oriented approach, focusing on the client’s experience from the day outside counsel is retained up to and beyond the completion of the matter. Effectively, each outside lawyer must change his or her mindset from that of serving as legal counsel for a particular matter to serving in a more comprehensive capacity—as a sophisticated legal concierge, if you will, who deploys all the resources at his or her disposal to address the client’s wide-ranging legal and business concerns.

While outside counsel should continue to work diligently to achieve the right result for the client, the experience-oriented approach demands that in the course of outside counsel’s efforts, the client’s broader concerns and the client’s inclusion in the endeavor are at the center of outside counsel’s focus. It is the client—not the matter—that must be foremost on the mind of outside counsel. As a legal concierge, outside counsel should make no bones about pampering the client by exploring ways to exceed expectations with legal support and services that go beyond the contemplation of the engagement letter. In the single-minded approach towards addressing all the needs of the client, the right result will be a natural byproduct, but more importantly, this approach will result in an increase in the client’s level of satisfaction, trust, confidence, and commitment to outside counsel.

Undoubtedly many lawyers will instinctively balk at the notion of serving as a legal concierge—of working to satisfy amorphous needs that leak beyond the scope of the matter for which they were retained. They will argue that such a mindset jeopardizes the work product of outside counsel, cripples the intellectual rigor that lawyers bring to each matter, and reduces outside counsel to overpaid customer service representatives.

We will see in the pages to come that such concerns are unwarranted. In fact, we will see that by taking a broader view of a lawyer’s representation of the client, the work product of outside counsel is far more likely to improve, the work will be more intellectually stimulating, and counsel’s role with the client will broaden, allowing counsel to serve as a true partner to his or her clients. In short, the service to the client is improved and outside counsel’s practice is enhanced.

Even now you may ask, “Why all the fuss about service if I manage to get the right result for the client?” Why should the client care about anything other than a favorable disposition of the very matter I was hired for? To answer these questions, let’s look at the world through the eyes of the client. Imagine that you are doing work for ABC Corporation, and your client is the company’s general counsel.

The general counsel hired you to represent ABC Corporation in connection with a suit filed by a competitor. The general counsel reports to and supports a CEO, a Board of Directors, and an executive management team, some of whom are extremely demanding, others annoyingly anxious, while still others are irascible and perpetually skeptical. All of them, however, have one thing in common: they look to the general counsel to provide timely, astute, and comprehensive legal advice and guidance for the company. The general counsel, in turn, looks to you for timely, astute, and comprehensive legal advice and guidance. So if your representation of this client is based on the narrow premise of getting the right result with little concern for the customer service aspects of the relationship, what happens when the general counsel is reviewing the company’s legal issues with his team and they arrive at the piece of litigation on which you are working for the client? With such a limited view of your obligations, it would be fair to assume that the conversation could go something like this:

Hypothetical Example 1.1 Disastrous Representation

CEO: What’s going on with the Acme Corp. litigation?

GC: We plan to file the response to the plaintiff’s amended complaint next week.

CEO: I thought we were going to get that filed earlier this week.

GC: Well, outside counsel promised to get me a draft of the response last week, but I haven’t received it yet.

CEO: When will you be getting it?

GC: I should get it today. I’ve been trying to get in touch with him, but haven’t heard back.

Irascible and skeptical sales executive: How long have you been trying to reach him?!

GC: (a bit embarrassed) Uh…it’s been a couple of days.

Irascible and skeptical sales executive: He’s dodging your calls, the SOB!! Some of our largest customers are tracking this litigation and are concerned about our ability to continue delivering service based on the claims in the complaint. This can’t continue to go unaddressed.

GC: I completely agree. His assistant said he’s wrapping up a deposition. I’m sure he’ll call today.

CEO: When is the deadline for filing?

GC: Ah, I don’t know the exact date. There were a few changes in timelines based on the new scheduling order, but I haven’t gotten an update on the status. I’m sure we still have plenty of time.

CEO: You’re sure?

GC: Well, that was one of the issues I was going to clear up with counsel.

Painfully direct executive: You have no idea, do you?

CEO: You understand how important this matter is, don’t you?

GC: Of course, I emphasized the urgency of this in my last voice mail and e-mail.

Chief financial officer: Our exposure on this is about $12.5 million, correct?

GC: That’s right.

Anxious executive: Oh, dear!

Irascible and skeptical sales executive: He’s probably billing you for dodging your calls! I bet if you check next month’s invoice, it’ll say “2.5 hours—dodging client’s calls”!! I know a couple of senior partners over there… Do you want me to reach out to them?!

GC: No…I…

Chief finanical officer: Speaking of bills, we received counsel’s invoice this month and it’s for $34,000. I know it was like pulling teeth for you to get a budget out of him, but he only budgeted $20,000 for this month. He’s been over budget every month!

GC: I know. That was one of the things I was going to talk to him about when he called.

Irascible and skeptical sales executive: I guess he didn’t budget for the time he spent dodging your calls!!

GC: No. He added a partner and two associates to the team and they did a fair amount of work without running it past me, so I was going to discuss that with him.

Painfully direct executive: He’s walking all over you.

CEO: This litigation is getting expensive! They’re writing off some of that time, right?

GC: That’s part of what I wanted to talk to him about.

Irascible and skeptical sales executive: You’re damn right they’re writing it off!! If our customer service was this bad, we’d be out of business!

CEO: So, I read your memo and it said that the plaintiff raised an unfair competition claim out of the blue. How did we not see that coming?

GC: Well, I had to twist counsel’s arm to put together a pre-matter assessment, and it was rushed and not as comprehensive as it could have been. I’m not sure they understood the intricacies of the business to grasp the substance of the claim.

Chief financial officer: (flipping through stacks of spreadsheets) They charged us $11,500 for that assessment!

CEO: Wasn’t it this firm that looked at our practices a couple of years ago on this issue? They certainly seemed to grasp the issue then.

GC: Yes, but it was a lawyer from another department in the firm. It appears that they didn’t communicate the information across practice groups.

CEO: So, what’s the danger in this new claim they raised?

GC: Well, it could result in treble damages.

Anxious executive: Oh my! Goodness gracious!!

Painfully direct executive: You’re doing a terrible job.

CEO: Can all of you excuse us? I want to speak to [general counsel] alone.

GC: (Gulp!)

Although this parade of horribles may seem like hyperbole, I assure you that there are a number of in-house counsel who have experienced a similar grilling (albeit on a smaller scale) stemming from the neglectfulness of outside counsel. When providing legal services, it is imperative that outside counsel keep the client in mind and informed throughout the representation. The hypothetical illustrates why the issues in-house counsel deems important extend beyond the resolution of the matter at hand. It also serves as a telling example of how in-house counsel can suffer a thousand cuts at the hand of an inattentive outside counsel during the course of the representation: cuts that will not be easily salved by ultimately obtaining the right result, and cuts that will lead in-house counsel to find new outside counsel when the next matter of significance arises. Most importantly, these cuts could have easily been avoided if outside counsel had viewed the representation of the client more broadly and focused on the customer service component of the job. We’ll explore exactly how outside counsel can broaden her perspective in the upcoming chapters.

Profit-Oriented Services

For almost as long as lawyers have been plying their trade, the cost of legal services has been a source of friction in the relationship between lawyers and their clients. In 1993, the American Bar Association issued a Formal Opinion in which it stated, “One major contributing factor to the discouraging public opinion of the legal profession appears to be the billing practices of some of its members.” [4] You will see that the results of surveys of in-house counsel presented in Chapter 2 will serve as strong reminders that the tension created by the way legal services are billed continues today.

One of the foremost concerns expressed by clients about legal fees is the use of billable hours as the primary means of charging for legal services. The most prominent complaint of the hourly billing model is that it gives law firms the incentive to work inefficiently, to employ the “no rock left unturned” approach, which can significantly increase the client’s legal costs, without necessarily having a corresponding increase in the chances of a favorable result. In fact, in the aforementioned Formal Opinion, the ABA went on to state that “pressure on lawyers to bill a minimum number of hours and on law firms to maintain or improve profits may have led some lawyers to engage in problematic billing practices.”[5] At the end of the day, as the argument goes, the hourly billing model is not congruent with the interests of the client.

This incongruity has resulted in an ever-increasing number of companies and business groups pushing for alternative methods of billing. The Association of Corporate Counsel (ACC) [6], for example, has launched a national campaign called the ACC Value Challenge. The stated purpose of the ACC Value Challenge is to provide networks, tools, and dialogue to bring law firms and corporate customers of law firms together to develop ways to reconnect value with the cost of legal services. New businesses have spawned in an effort to assist law firms and their clients in structuring alternative “value-based” billing models to better align the cost of legal services with the value provided to the clients.

While I support the efforts to find creative alternatives to billing for legal services, I do not subscribe to the proposition that the hourly billing model is irreparably broken. In fact, it is not the model that is really the issue; it’s the mindset behind it. Much like changing a lawyer’s thinking from providing results-oriented services to providing experience-oriented services, an outside counsel (as well as law firms themselves) must make a seismic shift in mindset about billing to properly address concerns about the cost of legal services. Yes, alternative or value-based billing could certainly be a result of this change in mindset, but so will a more equitable implementation of the hourly billing model.

To start the first rumblings of this seismic activity, it is important to acknowledge that the legal profession is a very specialized one. Every specialist should be paid appropriately for the value derived from the employment of his or her skills. A good plumber is worth his weight in gold, as is a good heart surgeon, engineer, or lawyer. One challenge that every profession faces is properly valuing the skills in question. For the most part, the market does a decent job setting the values of the various skilled professionals. For purposes of this discussion, we’ll employ the hourly billing model and we’ll assume that the hourly rate charged by a lawyer properly measures the true value of that lawyer based on his or her skill, knowledge, experience, connections, and access to resources.

Having established that its services are properly valued, a law firm can then bill a client under one of two approaches. The first is based on the value that the lawyer adds to the client’s cause, which I call billing-for-value (this resembles, but is more specific than, the value billing discussed by the Association of Corporate Counsel in its Value Challenge initiative). For example, if a lawyer’s services are deemed to be worth $300/hour, and that lawyer spends 100 hours working on a matter, then the cost of the legal services would be $30,000. Assuming that the hourly rate is an accurate representation of the lawyer’s value and that the lawyer has efficiently worked the matter, the value of the legal services provided to the client is $30,000. This works well from the client’s perspective, as the client is getting $1 of value for each $1 it spends.

Unfortunately for clients, a large number of law firms bill under the second approach—a profit-oriented billing model. Under the profit-oriented billing model, outside counsel’s billings are driven less by the value provided to clients and are more a product of growing the firm’s bottom line. Under this model, the law firm bills the client for the firm’s opportunity cost—that is, any time that a client’s matter may have taken a lawyer, paralegal, or other billing personnel away from billing another client. While the law firm will still bill the client for the value provided by the lawyer (i.e., the work the lawyer performs that is directly related to resolution of the matter), it will also bill the client for its opportunity cost—the loss of potential revenue to the firm for having personnel dedicated to that client’s matter. Going back to the example above, the $300/hour lawyer who spent 100 hours working on the matter also spent an additional 15 hours of time traveling to and from the client’s office in another city, as well as driving to and from court. That’s an additional $4,500 in legal fees for which the firm will bill the client, yet for which no additional value was provided to the client. Now, for every $1 the client pays the law firm, it gets $.87 of value. When you include the fact that the client is likely also being billed for the firm’s internal costs (sometimes at a profit to the firm) such as faxes, long distance calls, copying charges, and secretarial overtime, the value received per dollar spent goes down even further.

From a purely financial perspective, the profit-focused approach that drives opportunity-cost billing makes immense sense for the law firm. To the extent a client takes an asset of the firm away from other paying clients, why shouldn’t the firm be compensated for that asset, regardless of whether there are direct benefits to the client? From the financial perspective of the law firm, opportunity-cost billing is reasonably defensible.

But, this approach makes far less sense from the client’s perspective, where the client hires a firm for its expertise and expects to pay the firm based on the value the firm provides the client. Generally speaking, clients are willing to pay for the value received as a result of the expertise of its counsel. They are willing to pay for the hours it takes for an expert litigator to devise and revise a litigation strategy, to research, to draft briefs and motions, to prepare for hearings, and to argue the case at trial. This is why the client hired the lawyer—for his or her expertise and the value the client will derive from that expertise. The client, however, does not want to pay $300/hour for the lawyer to drive to and from meetings, for the training of first- and second-year associates, for any law firm personnel to do administrative work or for the law firm’s cost of doing business (i.e., copying, faxes, or overnight courier charges). The client hired the firm for its expertise, and wants to pay for the firm’s expertise—no more, no less.

It is with this understanding, and from this perspective, that the law firm must approach how it bills for its legal services. When operating as a legal concierge, outside counsel must have a mindset that embraces a broader view of their role in the provision of legal services, so the client’s needs, rather than obtaining a desired result, are the focus of outside counsel’s efforts. The way counsel bills the client should be approached with that very same focus on the client. Specifically, the client should be billed not in a way designed to increase outside counsel’s bottom line (however justified), but in a manner that is designed to ensure the client only pays for value – $1 of value paid for $1 of value received.

Will employing this new approach to billing result in smaller margins for your law firm? In the short run, absolutely. But, if implemented in conjunction with the other tools and techniques outlined in this book, the likelihood is that the tighter margins will be more than offset by the higher volume of business and more certainty of future business, considering that tighter bonds will likely be formed with clients. Additionally, those margins are likely to grow in the future as outside counsel takes on more substantive work for the client, gains a deeper understanding of the client, and increases its efficiencies when working with the client.

We will discuss how to bill for value under the hourly billing model in Part II, Chapter 8, as well as briefly address varying alternative billing models that can be employed to better align value with the legal services provided by outside counsel. As firms begin to embrace this billing-for-value approach and alternative billing methods, firms who stick with the old profit-oriented mindset will be billing an ever-shrinking pool of clients.

Client-Centric Services

The purpose of this chapter is to push outside counsel to think about the relationship with each client differently – to get away from a results-oriented state of mind and focus efforts on maximizing the experience of the client during the course of the representation; to discard the profit-oriented billing practices and strictly adopt the practice of billing-for-value; to evaluate outside counsel’s actions from the perspective of the client, and to view herself as a legal concierge, retained for the purpose of addressing the numerous and varying needs of the client. Only by adjusting outside counsel’s thought processes in this manner can she provide the type of service that adds immeasurable value to clients—the type of service that we’ll be discussing throughout the remainder of this book, to which we’ll refer to simply as client-centric legal services.

The essence of client-centric legal services is that outside counsel builds the practice around the needs of the client. The terms of the engagement letter, how the matter is staffed, how services are provided, how information is gathered and communicated, how the matter is billed, and each aspect of outside counsel’s practice is structured around the client’s business and satisfying the needs of that business.

Amazon is a great example of a company that has prospered by focusing on the customer experience. When contrasting the plight of big box electronic retailers with the success Amazon has enjoyed, it becomes clear that adopting and investing in the customer-first approach pays off. While it’s true that Amazon may have benefited from the fact that most of its customers were not charged sales taxes for their online purchases (although that benefit is quickly changing), by most accounts, it is the service that has been the gating factor in Amazon’s success.

Amazon has built its business around the customer’s point of view. Its inventory is extensive, yet carefully managed to ensure products are immediately available when customers want them. When Amazon makes a mistake, they’re quick to fix it, usually at no cost to the consumer. They have helpful representatives available in real time to answer questions, but they also have ample pages on their website dedicated to product reviews and FAQs that assist in guiding customers’ decisions. Because they lack physical locations, Amazon goes the extra mile to make returns easy by paying for the cost of shipping items back. I read of one instance where a customer purchased a television with a manufacturing flaw, and Amazon insisted on picking up the unit, sending the customer a replacement, and installing the new television for the customer. Yes, there’s an expense to providing this type of service, but the upside to building a business around the needs of the customer is a loyal, stable, and growing customer base that has made Amazon one of the most significant players in the retail sector.

Law firms and sole practitioners, too, must transform their businesses to provide client-centric services and to build their businesses around the needs of the clients, rather than around the expertise of the firm. Outside counsel should take an accounting of its intellectual resources and implement processes, procedures, and systems that enable clients to better benefit from those resources. Every major initiative of outside counsel should be driven by how those initiatives can add value for the client.

Under Steve Jobs, Apple, Inc., became the most valuable technology company in the world in 2011. Oddly enough, Jobs grew Apple into a money-making juggernaut not by focusing on profits, but on a maniacal commitment to building great products. The result is a loyal customer base that knows it will get a perfectly designed product that “just works,” and customers who are willing to pay top dollar for that product. With a great product, the profits will follow.

Outside counsel must adopt a similar commitment to delivering value-based, client-centric legal services that comprehensively address the needs of their clients. While restructuring to mold outside counsel’s business around clients’ businesses may require a dedication of financial and human capital, it will also lead to a foundation of stability and profitability that will serve outside counsel for years to come. The remaining pages of this book discuss in detail what outside counsel can do to build a practice dedicated to the delivery of client-centric legal services.

  1.  Also for purposes of this book, we’ll refer to the company for whom the “client” works as the institutional client.
  2. The survey results can be downloaded from
  3. ACC CLO Survey, p. 43.
  4. ABA Formal Opinion 93-379
  5. ABA Formal Opinion 93-379
  6. The Association of Corporate Counsel, with over 30,000 members, is, in my view, the most influential and effective association established for in-house counsel; therefore, its initiatives should be taken seriously by all members of the legal community.

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