lawyers tend to forget cost should meet value of work

Depending on which day of the week is February 28, I have been writing either trying to analyse the implications or a budget wish list, usually changes in FDI in insurance, retail and defence sectors. This time I decided to forgo this annual effort and devote this column to something closer to my core expertise, being the nature of legal services that law firms need to provide to their clients in the changing scenario of India Inc’s requirements, inspired by a session of the daylong program organized by the Society of Women lawyers (SOWL) on the expectations of corporate/in house counsel from its external Counsel.

I have taken the liberty to highlight some of the issues flagged by the panelists in the session. What transpired from the joint presentation by two notable corporate Counsels in an interactive session with the participants, all lawyers and mainly women centered around many aspects of the relationship, in exchanges which raised the concerns of both sides, in identifying what were the essentials, beyond the basics of Attorney Client privilege, and confidentiality agreements, focusing on skill sets and response levels.

As in all such cases, the perception is that the grass is always greener on the other side. Many practicing lawyers believe that in house lawyers have a cushy time, with assured incomes and vacations, and the work is essentially is outsourced to external counsels after collating the information, whose product and advise is then reported to the Management. This is not entirely correct. The in-house lawyer has to wear many hats.

Other than understanding the Company’s business inside out, in-house Counsels are expected to deal with every major and minor legal issue, from compliances to big-ticket litigation. They are also expected to deal with situations arising out of the organisational needs, real estate ,if the company is investing in office space or facility land, the multiple approvals and permits that go with it, commercial contracts, restructuring and carve out exercises, consumer complaints , to name a few. But additional specialized resources are required for providing value addition, which the external counsel brings on board, stemming from its capabilities in providing a single window for the entire range of legal services, as also the benefit of experience and expertise — “in other words competence and capacity.

What does the Corporate Counsel look for in selecting an external consultant. A known name and reputation helps. Otherwise they look at the size, resources and most importantly the proactiveness, and in going forward – solutions and prompt deliveries.

External lawyers have to deliver not just prompt acknowledge-ments and engagement letters but also make efforts to understand the Client’s business, the CEO’s comfort level and the pressures which face senior management. Law firms should be able to provide updates of legal and regulatory developments, a wide network of support, including access to Senior Counsel and specialists for additional advice and appearances in situations which warrant and justify such requirement. A common sense acquaintance of general know how, providing timely responsive service in delivering commercially astute advice and not caveated opinions is critical. The bottomline of what emerged in the session discussion from the Corporate Counsels was that ease of communication is paramount .

What is very often the bone of contention is the cost. The Corporate Counsel claims to be operating under budgetary constraints. The feel is that often assignments are used as training grounds junior lawyers on the file with unrealistic charge out rates leading to unjustified disproportionate costs. In-house lawyers typically find a discrepancy between the expected and actual cost of the legal work they outsource. The gap is often accompanied by confusion as to what work was actually done, which is a comment that relates not only to billing structures but also docketing practices. What is also resented is billing for small queries.

The External Counsel’s perception is that General Counsels seek to focus on extracting value for money from their external legal advisers. These issues are best addressed, as we are aware, in a properly structured letter of engagement with a defined scope of work, which is agreed in writing to be revisited by both if there is a material alteration in either item, and a flexible realistic approach on both sides. Just as clients can be unreasonable, lawyers also tend to lose sight that the cost should commensurate the value of the work.

What is most important for the external lawyer is to establish a relationship of confidence and trust, so that the ground rules are never distorted. Even then, all of us have experienced unwarranted deductions and withholding of fees without prior consultation. This can often be penny wise, pound foolish.

Kumkum Sen is a Partner at Bharucha & Partners, Delhi Office and can be reached at kumkumsen@bharucha.in