“Legal Interlude”, a 60 minutes round table

In light of the desire of UIA to attract more and more legal practitioners and ensure even more fruitful exchanges with regards to the practice of law, the In-house Counsels Commission has been set-up in 2021. Its President is Arianna Righi, Associate General Counsel EMEA at Archer-Daniels-Midland, its Vice-President is Susanne Margossian, Legal Director at United Pharmaceuticals, and its Secretary is Alexis Brunet, Legal Counsel EMEA at Archer-Daniels-Midland. This newly created commission is a unique opportunity for corporate counsels and attorneys from all jurisdictions around the world to come together, exchange and enrich each other on the legal practice, as carried out by and seen from the perspective of both in-house counsels and attorneys, with an aim to develop their collaboration.

Therefore, the UIA by this opportunity ensure the creation of a privileged platform to collaborate on a variety of subject matters of common interest such legal professional regulations in relation to the legal privilege, the membership of in-house counsels to bar associations, and a large number of legal practice matters, which can be explored from the point of view of both legal roles, such as, for example, M&A, contractual matters, regulatory matters, artificial intelligence tools, best practices, organization of and relations between law firms and legal departments, and much more.

In order to launch the commission’s activities and attract more interested parties to join it, we have launched the “Legal Interlude”, a 60 minutes round table with international panelists to discuss and compare best practices and approaches towards specific legal topics that the two legal professions may deal with, seen from their respective eyes.

The Legal Interlude is therefore the perfect concretization with regards to the aim of the In-house Counsels Commission as we have both in-house counsels and attorneys acting as a panel, sharing experiences, best practices and practical advices coming from different jurisdictions on a given legal subject matter, being available to provide information and, recommendations with regards to their respective specificities and answer to all questions from the attendance.

The first Legal Interlude, hold in mid-June 2022, was dedicated to “Practical considerations when companies appoint law firms”. The following questions were discussed by the panelists with the audience: (1) How legal department choose their law firms and what are the criteria that the in-house counsels follow to appoint law firms? (2) What are the fees arrangements that in-house counsel prefer when they appoint a law firm? (3) What are the criteria for assessing law firms performance ? (4) Based on your experience, what do you expect that law firm should focus on to improve the relation with their client or that the in-house counsels should focus on to improve the relation with their law firm?

To answer all these very interesting questions the panel of the first edition was composed of the President of the Commission Arianna Righi, Associate General Counsel EMEA of Archer Daniels Midland Group, based in Switzerland, Alina Quach, French lawyer practicing in China for more than 20 years, Slavomir Halla, Deputy Chairman in an energy company in the Central European region, lawyer and university professor based in Czech Republic, and Rabindra Jhunjhunwala, lawyer based in India and Counsellor to the President of the UIA.

Please find below a résumé of the lively and enriching discussion that took place during the first Legal Interlude.

1) How legal department choose their law firms and what are the criteria that the in-house counsels follow to appoint law firms?

From a general perspective, many companies do not have set guidelines on how to appoint a law firms and rely more on a professional or personal experience approach.

The main criteria driving the choice of legal departments of the law firms assisting them is the quality of the assistance that they receive from the law firm that they work with, from a substantive and efficiency perspective. Responsiveness is also key as in-house counsels have to meet the timing constraints of the company.

One of the ways that in-house counsels find and appoint a law firm is the past experience with a given law firm, the personal connections the in-house counsels have with a solicitor, for example from the law school they attended or professional associations or business they are member of and even business or joint-ventures partners, for example. When looking at a new law firm appointment in a specific country or for a specific topic where the in house counsel cannot rely on existing professional relations with law firms, they also look into references or presentations of law firms in legal directories journals, publications, such as Legal500 or Chambers, reach out to the top five referenced therein and then make their final choice based on the assessment they make after the exchange with the contacted law firm.

Legal departments tend to continue to ask for assistance to law firms with which they have worked in the past, if they were satisfied by the quality of the services they previously rendered. A law-firm which is already experienced in the same field of business as the company as greater chance to be selected as per its capability to understand the stakes and challenges of its clients, which has the advantage for the legal department to gain time in terms of explanation of the background, goals and constraints at stake. When in-house counsels resort to large law firms, they appreciated having a sole lawyer as single point of contact, either a partner or a senior associate rather than having to liaise with many lawyers or writing to the law firm’s general email box, as this helps to build trust and deeper collaboration.

Law firms that have shown quick adaptability skills to the company’s needs, business and culture are more likely to be selected as well by in-house counsels. Besides, the willingness of the law firm to propose or explore new technology and innovation areas, to redesign part of its work ecosystem to facilitate collaboration with their client are of key importance.

The quality of the advice provided, its clarity and its length is an important criterion for choosing a law firm. Indeed, long legal opinions are rather unnecessary as in-house counsels’ role is to assist management in taking business decisions, so a clear explanation of the legal issue at stake, short, tailor made and practical recommendations coming from their law firms are preferred. Theoretical knowledges is always welcome especially to develop the legal culture and knowledge of the legal department, which usually does not have enough time to attend legal trainings as they would want, but a business oriented approach of the law firm is more pertinent and allows to gain time to the work of the inhouse counsels. In a matter of fact, in house counsels are driven by the time, hence the responsiveness and ability to respond to the deadlines are as well very important criteria for choosing a law firm.

More and more companies are looking into the international and diversity background of the law firms, meaning that they seek to receive advice from a law firm which has diverse teams, from a gender, age, origin and ethnical perspective. The engagement of the law firm in the sustainability field and its pro-bono capability are also scrutinized, as companies are looking that the law firms are also community driven and therefore show commitments toward those causes. Especially companies listed in the NYSE, CAC40 or equivalent are under a strong pressure from shareholders and other stakeholders with regards to their commitment and actions in the fields of diversity & inclusion, sustainability and pro-bono engagements. Therefore the legal departments pay attention that their service providers also share those values.

In term of practical consideration with regards to law firms in China it is important to raise the question of the relation between the Chinese government and the law firms, and the status of the attorney-client privilege. The notion of “good lawyer” is first to be appreciated by the Communist Party, as explained by President Xi Jinping : “[We should] educate and guide lawyers to consciously abide by the basic requirements of supporting the leadership of the Communist Party and the socialist rule of law in China, and strive to be good lawyers satisfied by the party and the people […]". Chinese lawyers and law firms are under a strict scrutiny in China and such specificity should be kept in mind when appointing a law firm in China. Furthermore the concept of attorney-client privilege is not as widely accepted as in western countries. There is an obligation for the lawyers to protect the confidentiality of the information of the client and also the trade secrets, but this obligation might be limited and the lawyer may have to disclose information if it entails national security or criminal activities for example. In addition, it is must likely that it would not resist a disclosure requirement from a court or from governmental agencies.

The choice to appoint large law firm having offices worldwide or small ones having correspondents in various countries depends on the matter. While working on transnational project it makes more sense to work with law firms having offices worldwide which are able to cover quickly and with efficiency the differential jurisdiction aspects of a case or project. However, smaller firms are also selected for coordination when they can provide correspondents in other countries and ensure their standards of quality. With regards to local law firms it will as well depends on the project and its specificities, but the legal fees negotiation is tougher at the advantage of the company as many law firms are generally available. In any case while working with international company, professional English writing and speaking is a must as to ensure perfect understanding of the situation and the advices.

(2) What are the fees arrangements that in-house counsel prefer when they appoint a law firm?

Legal departments are support functions within the company, as opposed to sales departments, and therefore they are viewed as a cost from a profit and loss perspective of the company. Therefore legal teams are under a strong pressure from the financial department to keep law firm’s fees under control. Hence, it is necessary that in-house counsels have visibility on those costs and to this end agree with the law firm on clear fees arrangements before they are engaged. The preferred fees arrangement for legal departments are fixed or capped fees, when feasible. The notion of “budget” with regards to fees arrangements is lesser appreciated as such can be exceeded at any time without the in house counsel knowing. In house counsels will not appreciate being charged for additional work over budget that hasn’t been notified, discussed and agreed beforehand. In house counsels do not possess the time to review daily the timesheets on every project for every law firm they work with, hence trust is put into the relation. Whether monthly or bi-weekly meetings are great occasions to do so will depend on each company or each in house counsel. In any case, the “rules of the game” must be agreed from the beginning and both parties should respect them. Preferential fees are also an alternative meaning that for specific legal matters where fixed or capped fees are not feasible, for example in the event of assistance in litigation.

Preferential fees may be an agreement on the law firm applying an hourly rate with a considerable discount and, in addition to that, a success fee, where allowed by the applicable legal professional rules, in the event that the law firm is able to lead the company to win the case.

In-house counsels do appreciate some reasonableness and openness to apply discounts on the fees for example when the law firm assist on long-term projects, as in turn it is likely that the company may be more include to resort to that law firm again for assistance on other matters. Building a three or four years professional relations with a company can represent an overall important income for the law firm which, from an in house counsels perspective justifies a goodwill gesture from the law firms.

On a Chinese perspective, customers are very demanding in term of legal fees and require most of the time immediate results. From a European perspective it is unusual that fees negotiation with the law firms become extremely though, they are usually already part of the relation itself and are handle very smoothly with reasonable demands on both side.

(3) What are the criteria for assessing law firms performance ?

Depending on the company, the law firms performance will be assesses either orally in an exchange with the law firm’s partners or by a written report, questionnaire to be shared with the management and the rest of the legal team for future use. Such assessment are realized directly at the end of each legal matter or on a yearly basis at the end of the year, in order to already discuss possible collaboration on future projects.

(4) Based on your experience, what do you expect that law firm should focus on to improve the relation with their client or that the in-house counsels should focus on to improve the relation with their law firm?

In order to deepen the relation with the law firm, in house counsels are looking for services from the law firms that go beyond the advice on a given legal matter. For example, the law firm offering legal trainings to the legal departments are highly appreciated as not all legal counsels do have the time to review the latest news on laws or jurisprudence. Legal trainings on soft skills, for example to prepare a junior in-house counsel for his or her career advancement in its company, are also very welcome and allow the company to perceive the dedication of the law firms towards self-development, diversity and inclusion internally and externally.

Additionally, In house counsels appreciate receiving short emails on new regulations regarding their field of activity which proves that the law firm is not sending general emails to all its clients but tend to build a specific relation which each of them and is dedicated to such relation even.

The broadcast of the first Legal Interlude is available at the following address : click here

By Alexis Brunet
ADM
Hamburg, Germany