Firms’ Internal Counsel Face Many Issues, but Pay Even Closer Attention to These Four

By Elizabeth J. Cohen

Those who serve as internal counsel for their law firm mustn't neglect four “nuts and bolts, block and tackle issues”—lawyers heading for the exit, lawyers coming in, keeping clients in the loop and communicating effectively with others in the firm.

That in a nutshell is what speakers at the Law Firm General Counsels' Forum recommended Oct. 16 to attendees at the Aon Law Firm Symposium in Chicago.

“You probably dealt with one of more of them before you left town yesterday morning,” said moderator Henry S. Bryans, senior consultant to Aon Professional Services in Chicago.

Partners Who Leave

Concerning partners who leave to join another firm, Susan A. Cahoon, of Kilpatrick Townsend & Stockton LLP in Atlanta, gave some pointers for creating what she called a “Managed Departure Situation”:

“What's been going on before you learn they're going to leave?” Has the partner been talking to opposing counsel, without giving you any opportunity to protect your client from concerns about possible inappropriate disclosures? If so, the client will blame the law firm: “Why was he still getting access to my top-secret information when he was talking to the other side?”

Has the partner been talking to clients about his departure and encouraging them to leave with him? “You can look for unusual absences and e-mail traffic if you want to go there,” Cahoon said, but she recommended thinking carefully about how strongly you want to react.

Return of capital. To protect the firm, use a pay-over-time provision, and specify what criteria will be used to decide whether to accelerate payments.

One of those criteria, Cahoon said, should be compliance with the partnership agreement prior to withdrawal—“we say 30 days' notice to us, and if you're engaged in serious discussions with another firm, immediately tell the executive committee.”

Don't create a record of consistently granting early return of capital to anyone who's leaving but won't be competing, and of never granting it to someone who will be competing, she urged. In effect, Cahoon said, this becomes a restriction on practice in violation of Rule of Professional Conduct 5.6.

Client files. Before you transfer a file to the departing partner, you need clear documentation that the client has authorized the transfer, Cahoon said.

“It's interesting what the lateral takes with him,” Bryans added, but “it's also interesting what the lateral leaves behind. If the departing partner says ‘I'll leave that one with you,’ there's some reason they're leaving it with you.”

Tool kits. The departing lawyer has probably developed a kit of templates over time for recurring issues. Have a published firm policy about what happens to these templates, and make it applicable to associates and partners alike, Cahoon said.

Lateral Hires

Panelist Charles J. (Mike) Cronan IV of Stites & Harbison PLLC in Louisville, Ky., talked about risks that lateral hires bring with them. His subtitle was “Beyond the Due Diligence Checklist.”

Lateral hires used to be viewed with some disdain, but not anymore, Cronan said. He cited a decline in institutional loyalty as well as an increase in the number of firms who say lateral hiring is “part of their growth strategy.”

Cronan explained that there are “circumstantial risks inherent in the nature of laterals” because so many are hired “opportunistically,” rather than on a schedule.

For example, he said, the move may be the result of a working relationship your firm develops with someone whose particular expertise becomes attractive to the firm. Because the lateral does not arrive as part of a scheduled group of new hires who will serve as a peer group, there is a potential for him to be “completely isolated,” Cronan said.

And because the incoming lawyer doesn't fit into the formal review process, he can slip through the cracks, Cronan said, stressing the importance of procedures addressing each step of integration.

He offered a sample time line, broken out into detailed entries by topic/skill, dates, whose responsibility it will be and how it will be done.

Entries in the topic/skills column included touring the office, getting an orientation to the library, learning the telephone and voice-mail systems, learning to use the e-mail and calendaring systems, getting a personal digital assistant, filling out personnel and benefits forms, computer training, learning the work allocation processes, learning firm targets and investment time codes, and learning timekeeping, client codes and billing.

Other problems are that some partners may view laterals as “added work” interfering with their practices, he said. And some may view laterals as “new competition for administrative support and internal resources.”

Cronan highlighted the importance of cultural compatibility. If the lateral comes from a traditional hierarchical firm culture, he said, and your firm views lawyers and staff as a “client service team,” the meeting of the two cultures may be disruptive. And if the value your firm places on cooperation, mentoring, and willingness to share credit is something new for the lateral, Cronan said, make sure he can adapt.

Communicating With Clients

Martin I. Kaminsky of Greenberg Traurig LLP in New York offered his advice on “Proper Communication with Clients”—“emphasis on the ‘proper,’” he said. Memorialization is important, he said, but you must consider where and how to memorialize: “Ask yourself what kind of a record do you want to create for your firm.”

“People communicate with you in one medium and expect you to communicate in response using the same medium,” he said. “You may have phone messages telling you to check your e-mail and vice-versa.”

GC Corner

Michael J. Ossip of Morgan, Lewis & Bockius LLP in Philadelphia shared a sample of his GC Corner column. His firm circulates a daily update summarizing new representations, victories, seminars, etc., and every Tuesday the update includes a feature called “GC Corner: tips and info from your firm general counsel.”

Each column highlights one timely and important topic, he said; past columns have covered insider trading policies and conflicts clearance guidance. Ossip said the column he just wrote discusses bar association guidance on social media use. Morgan Lewis collects the columns on its intranet site, and Ossip reported that he's gotten good feedback on them.

Ossip also discussed some not-so-obvious risks in business development. “Don't embellish the firm's expertise when pitching for business,” he said. “What if a particular lawyer you described as a ‘star’ isn't there anymore?”

Don't risk underestimating the cost of handling a particular matter, for example by telling the client “It'll cost you $X maximum,” Ossip said.

And don't overestimate what the firm can do for the client, he added. You don't want to tell the client it's a $20 million case, then end up suggesting settlement for $2 million when it turns out it's not such a great case.

Bryans was enthusiastic about Ossip's GC Corner idea, calling it “a great practice.”

“And I haven't copyrighted ‘GC Corner,’ so you're welcome to use the name,” Ossip told the attendees.

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

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