7 Overview Of The Corporate Legal Department

Transcription

1 7 Overview Of The Corporate Legal Department 7.01 OVERVIEW The corporate legal department acts like a law firm but within a corporation rather than as a private business entity like a law firm. The character of the legal department and its relationship with the rest of the corporation are determined largely by the company s size and culture, by the general counsel s philosophy, and by how senior management and the general counsel define their working relationship. Their relationship, coupled with the general counsel s strategic view of the legal department s capabilities, will, in part, determine the role of its staff attorneys and expectations they must meet. Depending on the extent of the legal work and the types of matters handled in-house, the role of a 227

2 228 Law School To Law Practice 7.01 corporate staff attorney can range from a business partner to a crisis manager to, in a few cases, a drone. General counsel shape their primary role either as the chief legal officer or as a strategic business partner, or in some cases as both. Such a characterization also impacts the definition and function of the legal department. If the general counsel sees his or her role as chief legal officer, it is more likely that the legal department will focus solely on law-related matters, and the staff counsel s work is often compartmentalized into discrete specialty areas of legal practice. For example, a health care company may devote part of the legal staff exclusively to regulatory matters, or a software technology business may focus the work of several attorneys on patents, copyrights, and intellectual property. A unionized manufacturing company may earmark some members of its legal staff for labor and employment matters. Still other companies like insurance companies that are bringing litigation matters in-house will allocate a large number of the legal staff to trial practice. A corporate law department focused only on specialty areas functions more like a law firm. In contrast, those general counsel who perceive their primary role as a strategic business partner tend to expect the staff attorneys to participate on the organization s planning teams. In this instance the health care company may use its legal staff not only to draft physician and hospital provider agreements but also to assist in the negotiation and development of provider networks to achieve competitive advantage. The computer technology company may look to legal counsel for advice on emerging trends in creative distribution contracting arrangements or franchise opportunities. Or the vice president

3 7.02 The Corporate Legal Department 229 of corporate finance might call upon legal department personnel to assist or partner in developing materials for private placements or secondary offerings. APPLYING THIS EXPECTATION TO YOUR RESPONSIBILITIES Understand the role of the law department in your corporation. Does the general counsel see his role as chief legal officer or strategic business partner, or both? Or is the general counsel simply a crisis manager? How does this affect your role as staff counsel? 7.02 LEGAL COUNSEL AS STRATEGIC BUSINESS PARTNER If the legal department is viewed as a strategic partner, the expectations of counsel take on an additional layer of complexity. This is the most satisfying and most fruitful of the client relationships within the corporate legal department context. The client expects you to understand the business in greater depth and the practical aspects of the client s issues, to spot both related and unrelated problems, to help design responsive and even creative solutions, and to serve as a resource during planning stages, from the valuable legal perspective. In addition, even though your various corporate clients may not express it, they expect you to be the educator on legal issues affecting their part of the business. You can update your clients on new developments and suggest novel alternatives that meet the same business needs.

4 230 Law School To Law Practice 7.02 CONSIDER: The research and development department of a hightech communications company is attempting to complete the latest release of new communications technologies, but it is having to rely more and more on outside consultants and programmers to complete the tasks. The head of R&D comes to the contracts attorney in the legal department to request drafting of several contracts for various outside consultants, in accordance with work orders previously negotiated with the consultants. The legal department attorney recognizes an opportunity to meet the client s needs and to draft the contracts without creating a log jam within the legal department. The attorney designs a contract for the outside personnel, attaches the scope of work description as an exhibit, and contains language for remuneration, term of relationship, and remedies for nonperformance. The R&D department can use the fungible form contract for various outside contract personnel without having to return to the legal department each time and worry about the turnaround time and an extensive approval process. The truly creative staff attorney arranges for the standard contract to be released on the company s internal network so that other departments can use the form, with the stipulation that all modifications to the form must be approved by the legal department. CONSIDER: A health maintenance organization (HMO) is launching a recontracting initiative with local physicians to move away from the traditional fee-for-service approach to health care.

5 7.02 The Corporate Legal Department 231 The physicians are naturally reluctant to go through this process, but the existing contracts are now several years old and have accumulated a maze of addenda and amendments. The provider relations department anticipates that the process will be arduous and recognizes that the traditional takeit-or-leave-it approach will not work. The staff attorney assigned to the contracting project suggests initial round table discussions with the major medical groups in the area, to determine what the physicians need and fear with respect to the managed care movement. The talks reveal that imposition of risk-sharing issues between general practice physicians and specialists is a critical component and must be shaped carefully and creatively. The attorney facilitates meetings among the company s actuaries, finance department, and provider relations department to work out a solution that would allow the providers to experience more of a partnership on the positive side of the ledger rather than just on the negative risk side. Several versions of the contacts are developed, and the provider contracting department can negotiate the business terms without involving the staff attorneys. APPLYING THIS EXPECTATION TO YOUR RESPONSIBILITIES Is the legal department in your corporation viewed as a strategic business partner? If so, you must provide practical and creative solutions to the client s problems. You also must educate them about developing new legal issues.

6 232 Law School To Law Practice MEETING THE CLIENT S EXPECTATIONS Identifying and meeting client expectations are as important to the legal department staff as they are to lawyers in private practice. The relationship between a captive client and a captive lawyer can be taxing. The relationship is more like a marriage than the traditional attorney-client relationship. One of your overarching responsibilities is to maintain and enhance the legal department s credibility and value to clients on a daily basis. Although clients do not ever see a bill from some legal departments, the relationship nonetheless needs nurturing to ensure that your advice is sound, heeded, and passed on. Many of the client expectations explained in Part I apply in the relationship between corporate counsel and their internal clients. Particular sensitivity is necessary to understand the exigencies of corporate life (putting aside for the moment the procrastinating client!). It is critical to become attuned to, and conversant with, each client s business language, scope of major responsibilities, and role within the company. Legal staff play different roles, depending upon the particular client with whom the lawyer is working. The client in the sales department, for example, will have far different expectations and perspective from the client in the finance department. The sales department of any company is pushing the frontiers of legalities (not intentionally) because the attention of its managers always is riveted above the line: What will move the product or service, and how can they increase competitive advantage and profitability through marketing and sales?

7 7.03(a) The Corporate Legal Department 233 Similarly, those clients responsible for developing products expect their contracts to be prepared quickly and broadly, so that the form can be used repeatedly. They are not thinking about the legal repercussions of each contractual relationship. When working with the contracting unit, counsel must understand that often the client simply wants the job done. The client has not thought about legal consequences in the event that the other side fails to perform its obligations or does not deliver the expected quality. Should such an unhappy circumstance occur, this client will be back at the legal department s door, this time enlisting the legal staff lawyer as hit man. Preventive practice is very important within a corporate context because if a major problem arises, you will always be the one who reaps what your client has sown. 7.03(a) Just Say How Staff attorneys must avoid saying no and practice saying how. One of the chief complaints leveled at a legal department is that the lawyers are extraordinarily creative in finding reasons why a project should not be done. This perspective is a common malady among attorneys, generally. Many are so immersed in the consequences of conduct that they minimize, if not overlook, the front end of the process. That is, they spend too little time, when first presented with the project, to educate themselves about the client s objective. Expect that your client may be resistant to your suggestions or even have a better idea on how to accomplish the objective or shape a business tactic.

8 234 Law School To Law Practice 7.03(b) 7.03(b) Say When One of the greatest challenges in working with inside clients is management of your and your client s time. A common rap against the legal department goes something like this (and it goes for the just say no complaint, too): I have this great idea; now I need somebody to help me ram it through the legal department. When a client perceives the legal department to be inaccessible and unresponsive a black hole that delays his or her project that person is apt to use all creative powers to avoid the legal department s involvement whenever possible. Do not think that just because you and those clients with whom you work receive a paycheck from the same office that they can t discharge you. Chances are if things do not go well, clients simply will not go to the legal department (or, at least, not to you) again, even if they have nowhere else to seek legal advice. It is incumbent upon you to scrutinize workflow processes, internal communication, and communication with your client contacts that impact the timeliness of your receipt of a client request, production of work product, and delivery of service, and to recommend or implement process improvements, as appropriate. So often, the deadlines are more than immediate; parties are already in the middle of a deal when the legal department is called upon to memorialize it. Clients in this situation are more apt to question or even resent the advice if it does not square with their world view. A companion challenge is to remain alert to shifting priorities among projects. The world seems to be spinning faster, and it is a wise legal department attorney who identifies changes in momentum among projects rapidly and manages the workload accordingly, so

9 7.03(c) The Corporate Legal Department 235 that any slowdown of a fast-track project is at the hands of the client and not the legal department. 7.03(c) Be A Facilitator An in-house staff attorney has the opportunity to play another unique role in the corporate context: that of facilitator. Corporate counsel have a much more thorough knowledge of the business and its competing interests than the outside law firm counsel can achieve. The staff attorney is in a better position to bring all the elements of the company to bear on what originally appears to be a localized problem. By doing this, the attorney can often step back from the middle of the discussions and let the business people solve the problem, while the attorney remains attuned to any new legal developments arising out of the problem-solving activity. This facilitation role works on several levels instead of being the liaison (and, therefore, sometimes the bottleneck in the company s relationship with its regulators), the staff attorney can foster the relationship with the outside agency and put in place mechanisms to allow the business and its regulators to address common or recurring situations. The internal lawyer s knowledge of the business, the industry, and complex laws and regulations presents a valuable opportunity to craft solutions. Sometimes you will be expected to be a facilitator by managing and working with an outside lawyer and firm on a matter. Your role may be very active participation in the dayto-day work, or it may limited to a managerial function. In either circumstance it is necessary that you develop project

10 236 Law School To Law Practice 7.03(c) management skills needed for educating outside lawyers about the business; planning; budgeting; maintaining the team s focus upon the objective, timeline, strategy, and cost specifications; and fostering regular communication on progress and problems. APPLYING THIS EXPECTATION TO YOUR RESPONSIBILITIES Maintain and enhance your credibility and value to the clients. Know the client s function and role in the corporation. Be positive and ask how the legal issue can help solve the problem. Try to make your work timely. Facilitate between the business people and government regulators.