Welcome everyone to another edition of my Global Tech Law Newsletter. Today a word about outside counsel and how to advise clients about risk. In particular, its about being a responsible advisor but still maintaining a practical mindset for your client.
The other day I was having a conversation with a lawyer I’ve worked with many times. He said, “One of the things I like most about working with you Art is your practical mindset.” He’s got the same mindset as well, one of the reasons we click.
The calculation of how much risk to take is really an art more than a science. And so yes, it’s a bit more subjective. And because it’s subjective, it’s where experienced lawyers can really make the difference. We can look at AI to offer a lot of efficiency in how lawyers work, from document review in discovery to creating contract templates, etc. But AI is not going to be able to help you decide what to do when faced with risk.
When you are a young lawyer, you suffer from the reality of you don’t know what you don’t know. As you grow towards a senior associate in a firm, you still struggle from a lack of confidence to tell a client to not worry too much about this risk or that.
Where I think this kind of judgement really accelerates is when you are on the inside of a company. Some big firm lawyers may diminish the value of in-house experience when attorneys try to return to work at a law firm. And I may be self-serving in saying it, but I actually think its invaluable experience because it forces attorneys to deal with problems “as the sausage is being made”.
Multiple in-house attorneys have told me they have discontinued using a firm because the advice they gave was a fancy (and expensive) memo with no actual practical recommendations.
I had a similar experience inhouse with a firm that I inherited from my predecessor. We were given a lengthy memo each time or an email filled with innumerable “defined terms,” which made the advice borderline unreadable for my own internal clients in the Finance and HR teams. I would give it about 10 minutes each time before I got a phone call from the head of Finance asking me to interpret the email from outside counsel for them.
What is the point of getting advice from outside counsel if I have to take your advice and completely translate into language that is more easily understood? A good outside counsel makes his in-house counterpart’s life easier. Not just by offering advice they can send on to their own internal business partners without much annotation, but also having a keen sense of who the in-house counsel’s ultimate audience is for the advice. Anticipating road blocks those business partners might throw up, skepticism those business partners might have, etc.
Be mindful that you can’t run a business never taking risk. And the value of holding a position can sometimes be defeated by the friction you create taking that position. Mitigating factors include whether you are creating a precedent for future deals with this customer/vendor or as a precedent other sales/business partners will use in the future when they loop you into their new customer negotiations.
The honest truth is, for small organizations, these factors aren’t present as much. The reality is the risks rarely materialize, are not as problematic as you have imagined, can often be resolved by business negotiation (though contract language does determine what base you start in in those negotiations), and are often not worth the potential opportunity cost of not doing the deal.
This is the mindset of an in-house counsel. And that mindset can be invaluable as outside counsel when you know your audience and help them become educated with practical thinking about risk. The client hires you as outside counsel because you have worked for multiple clients and know what other companies have done in similar situations. Putting yourself in their shoes with prior in-house experience just augments the power of that advice.
*This blog may be considered attorney advertising. It is for informational purposes only and does not constitute legal advice.