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As part of a series of interviews with in-house counsel, Stephanie Shores Lambert, vice president and associate general counsel of Staples Inc., recently spoke with Bloomberg BNA's Yin Wilczek. Lambert, who oversees a team of 12 in-house attorneys who handle all the legal issues for Staples's operations, discusses why the company may be moving to an online service provider to source law firms for some of its legal work. She also discusses how in-house and outside counsel may add to the value of the advice they provide their clients.
How did you become associate general counsel at Staples? Was being an in-house attorney always part of your plans?
When I was young, my family had a product liability lawsuit that we pursued involving the death of my father in a plane crash, which obviously impacted my life in many ways. As a result of a successful jury trial, I have always believed in the legal system's ability to solve problems and hold people and companies accountable for their actions. During law school, I actually worked in private practice for the law firm that was involved in my father's matter and then later moved to a firm with a broader subject-matter area and client base.
This second firm introduced me to intellectual property issues, which I found more interesting than litigation. This interest led me to my first in-house counsel role for a technology company here in Concord, Mass. during the dot-com boom. It was here that my IP focus deepened and I gained greater experience with transactional work. When that company was bought, I ended up at Staples supporting the Information Systems/Information Technology organization. I did that for several years until the General Counsel promoted me into a position handling our private-label products group, which accounts for about 25 percent of Staples's revenue.
I really enjoyed the product safety work I was handling, which seemed rather ironic: I lost my father due to a product safety issue and here I am handling product safety issues for Staples. So it was really a full circle experience for me.
I was recently promoted to a position where I oversee all of the lawyers who handle matters on Staples's operational issues, involving marketing, sales, manufacturing, merchandizing and real estate. I do still oversee my team's handling of the product safety matters at Staples, which I think will always be important to me.
How does being in-house differ from being an outside counsel?
When you are in house you're ingrained in the business, which means that you do a lot of listening to learn the business strategies and challenges. You're with the company day-to-day, so you become close to the business. I think the investment of time to learn the business makes lawyers better strategic thinkers. For instance, as a result of my efforts, I'm often asked to comment on and give input into new strategic initiatives and consider what might go wrong and how we can mitigate those risks.
When you're outside counsel, you only see the part of the business that the company chooses to share with you. Generally, an in-house role allows you to be a stronger strategic partner with your client than a role as outside counsel. Outside counsel, however, have the advantage of insight into a broader client base and usually bring various perspectives to the table. Since the in-house role can be limiting in this regard, outside counsel with a broad perspective can make themselves quite valuable.
Are there distinct challenges and advantages to being in each position?
Yes. When you're outside counsel, you're looking from the outside in, and it can be difficult to know what questions to ask or what rocks to turn over. But when you're inside, you have a better idea of where you might need to look to get answers. Just by being here, knowing much more, you can at least feel more comfortable that you have a fuller picture when providing advice.
But sometimes you're challenged as in-house counsel because familiarity can breed contempt, and the client may not necessarily want to take your advice on something. Given outside counsel's broader perspective, clients may perceive them as more credible, which can be a challenge in-house counsel needs to overcome. Again, building a trusted relationship with the business usually helps bridge any credibility gap.
Does Staples work with many outside firms?
Yes, Staples works with a lot of outside firms. In my area, we bring in outside counsel to supplement very technical areas of the law where we may not have the expertise we would like. It's not usually efficient to hire a lawyer who is narrowly focused since there may not be an abundance of work in that area. I bring in experts as the need arises, particularly for regulations that are very technical, in-depth and complex. In-house counsel does not typically have the time nor is it cost efficient to build up expertise in an area or a regulation with little broad demand in-house.
How many law firms are you working with right now?
I think it's between 50 to 90 firms overall at any given time. Years ago it was about 90 firms, but that number has decreased. It can't decrease significantly because Staples often hires outside counsel for local matters such as for store issues or real estate matters that require an expertise in local laws.
In deciding which outside firm to work with, what kinds of things do you look for or consider?
In the regulatory areas that I oversee, I look to outside counsel who are willing to learn our business and willing to put in the time that it takes to understand what our priorities, challenges and needs may be. I prefer firms not simply looking to add Staples to their stable of clients but rather firms that really want to put in the time to learn about Staples. For me in my role, it's very important that they know our business. This might be different if I were handling litigation, however.
It can also be a question of whether they are forward thinking—are they thinking about the risks to our business and letting us know, from time to time, about trends that may affect us. This shows me that Staples is at the forefront of their thinking. The types of firms that I've chosen to partner with are like that.
It's also important that their rates are reasonable for the level or complexity of the work that I'm asking them to do. I like law firms who are willing to think about flat rates or similar arrangements because these arrangements are predictable and allow us to plan. A project involving outside counsel researching regulations ought to be straightforward enough to enable an estimate as to how long such a project might take and how much it should cost.
I am also looking for outside counsel that can be flexible in terms of how they might want to work with us. We're outside of Boston, and we don't really have to have a local law firm that's right outside our backdoor. I am willing to work with regional players in order to obtain the right resource and cost.
I'm less inclined to hire firms that have the old-school approach, because I think that's not creative and it doesn't fit most of the predictable scenarios that come up in my practice. What I mean by the old-school approach is primarily enforcing the billable hour, not carefully scrutinizing the fees, and not being as proactive as one should be with your client. We all know that law firms have traditionally approached matters with a billable hour, but that's changing. I think the law firms that embrace new ways of billing and think more about getting paid for their expertise rather than their time are the ones that will do well with in-house lawyers.
Is there anything that would disqualify an outside firm for you?
I would definitely not appreciate a firm that didn't have a diverse set of lawyers or professionals working for them. I'm not necessarily saying a firm must have diversity on every single matter but I'd like to know that it's a law firm that is inclusive of a variety of people who are thinking about clients' issues. Clients are better served by diverse thinking on their matters.
In addition, I get irritated by law firms that don't personalize their service, meaning they don't do their homework before they talk to you. They should have some kind of sense of what your company does and what its strategies are before they approach you in the hopes that you will hire them.
How do you obtain value from outside counsel?
Lambert: One area law firms bring the most value in my opinion is by being proactive about the trends that might affect Staples. To the extent that outside counsel can provide me with information on trends in the law and enforcement as well as ideas on what other companies may be doing generally, I would consider that to be value-add. In-house counsel may be busy with day-to-day dealings and have limited time to follow every trend, so to the extent a law firm can help with that I appreciate it.
“For commodity work that can be done by almost every law firm, why shouldn't in-house counsel take advantage of the opportunity to compare law firms and find one based on your criteria as opposed to the law firm's view of what you might need?”BBNA:
You also said you recently hired a law firm through an online provider?
I used an outside provider that has an online RFP [request for proposal] program. The program allows in-house counsel to send an RFP out electronically to law firms, and law firms then respond back electronically. The service enables in-house counsel to view a dashboard of all of the responses in an apples-to-apples comparison. I was able to review the proposals from a variety of perspectives—hourly rate, blended rate, staffing percentages, etc.
There is a free response section for law firms, which enables in-house counsel to assess the value that the law firm would bring based on how much homework they've done about the company and the particular project. You can tell when a firm has simply taken their marketing materials and used that in their response versus a firm which has thought about your company, what it does, and its position in the market as well as what its needs may be.
The RFP process that I went through enabled me to find a firm that checked the box on most of the things that I needed. I think it's a relatively new way to source for law firms; I don't know if other companies are moving to it but I found it very effective, especially for commodity-type work. For commodity work that can be done by almost every law firm, why shouldn't in-house counsel take advantage of the opportunity to compare law firms and find one based on your criteria as opposed to the law firm's view of what you might need?
The provider I used is called Banyan RFP. It helped me tremendously so that at the end of the day, I hired a law firm that helped me achieve savings fairly quickly, and also met my internal client's needs.
do you use this service a lot?
Lambert: This was the first time I used this service. What's interesting is that the cost of the service would have been less than 1 percent of my savings over four years. It's a subscription service that allows you to run as many RFPs as you want during the term. You may need to purchase some additional professional services if you want something customized.
Because of my positive experience with the service, my colleagues here were very interested in hearing more about it. I believe we'll be taking a look at the types of work that might lend itself to running an RFP.
The other interesting thing that came out of that RFP was the appreciation I received from the firms for the feedback I provided. The firms told me that they don't usually receive feedback on RFPs so they found it very helpful. It was eye-opening to me that they weren't getting that kind of feedback. I would encourage other in-house counsel to at least give law firms a sense of why they weren't chosen in the RFP process. Without meaningful feedback, law firms won't understand your needs or ways to improve. How are they going to improve and meet your needs if you don't tell them how they are being measured? And that goes not just for law firms, but anybody you hire.
Are there types of work better suited to outside counsel as opposed to in-house?
In my area there is repetitive work that just needs to get done, such as basic contracts and regulatory filings, and there's more sophisticated work, such as advice-oriented or strategic-focused work. The strategic work tends to be handled by more senior in-house lawyers and the repetitive work managed by junior lawyers or contracts specialists. When resources are stretched and you can't just hire another lawyer, in-house lawyers typically look to outsource a temporary spike in work.
Particularly for a national chain like Staples, where it's not efficient to have in-house lawyers in every state, outside lawyers can manage local court appearances and regulatory agency hearings. Outside counsel can fill a bandwidth or expertise gap where there's not enough permanent work for a full-time in-house hire.
How many in-house lawyers does Staples have?
We have 30 in-house lawyers of which two-thirds are in the U.S. and a third outside.
Do you have a ratio for how many outside counsel you have to in-house lawyers?
No. I don't think a ratio is the most efficient way to manage the law department. It's not a good policy either to just throw lawyers at problems. Instead, it's best to think thoughtfully about the legal work and what the right level of resource is for that particular work. Does the legal work at hand need a senior lawyer, a junior resource, or could a paralegal do some of the work? Also, in-house counsel should ask themselves whether the work requires the attention of a lawyer. Sometimes in our efforts to provide great client service, we get pulled into doing work that rightfully belongs to our business partners. Legal staffing should really be driven by the nature of the work required by the company and what tasks you want to hire lawyers to do.
BBNA: Recent surveys and reports suggest that companies increasingly are relying upon their GCs to help drive their business. How do you get your team to think more strategically about Staples's business?
I think a lot of lawyers are very comfortable doing contracts because, like my experience, that's typically what you start off doing as a lawyer in-house. Over time, lawyers become exposed to issues that are not contractual in nature but may be more strategic. For instance, the company may want to expand its product line or into a new geography, which will likely expand the company's risk profile. This is where lawyers can add a lot of value, whether they're inside or outside.
As in-house lawyers, we try to anticipate the risks and advise on ways to mitigate them. My philosophy is usually: how can we get it done with a low risk profile? You're always going to have a level of risk in business operations; you just need to be comfortable with whatever it is or find ways to reduce it. I encourage lawyers on my team to be in touch regularly with their business partners so that they know the strategy, so that they can help guide the business and help them achieve successful strategies.
Doing this right takes an investment of time just listening to clients. Of course, this is not always what lawyers like to do. We like to approve contracts, we like to go to meetings and talk with other lawyers, and we're less comfortable in a meeting where we're not contributing and we're only listening. But all of that listening, over time, pays off.
Our legal department was rated very highly recently on an internal review of service groups within the company because we do that—we put in the time to learn about the business challenges and to think thoughtfully about how we can help the business achieve those objectives.
Ethics and compliance have become high priorities for companies because of increasing regulations. Do you outsource compliance work to outside counsel?
I don't directly handle the ethics work—we have a vice president for ethics and compliance that reports to the GC who handles it. Nevertheless, I agree that these are higher priorities because I have seen in my 15 years in-house that business clients are taking these issues more and more seriously because of the regulatory environment. For instance, in 2000 when I went in-house, I was asked to research new privacy regulations from the EU. I was challenged at that time to find clients who thought this was a serious risk. When you look at privacy regulations and compliance today, you can see that the climate has obviously completely changed due to the exposure and risks that have developed due to the proliferation of technology and the Internet. An increase in regulations has followed, which should not be a surprise to anyone.
In the compliance arena, while I can only comment on my area, I have gone to outside counsel primarily for audit work. Since I don't have the visibility into what other companies are doing, outside law firms can bring value by helping me make sure I am not missing anything in our compliance program. At the end of the day, most business people want to do the right thing, and it's a lawyer's job to help them do that.
What keeps you up at night?
What keeps me up at night is wondering whether things are going on that I'm not informed about, or whether I may have missed something. The fear of the unknown is always there.
But at the end of the day, you can only be in so many places at once, and you have only a certain number of hours. I continually ask myself whether I've educated clients enough to identify issues to bring to in-house counsel. I think that I am repeating myself over and over, but sometimes it takes several times for the urgency or the seriousness of an issue to resonate with people. I think this is basic human nature about most things.
I have observed in my years as in-house counsel that unless the lawyers bring it up, business people are likely to just continue doing what they do well, and that's to try to grow their business. I think lawyers have a responsibility to speak up to make sure legal risks to the company do not go unaccounted for by decision-makers.
Stephanie Shores Lambert is Vice President and Associate General Counsel at Staples Inc., in Framingham, Mass. In this role, she reports to the General Counsel and manages a team of lawyers providing legal support to Staples’ U.S. business operations.
During her 10 years at Staples, Stephanie’s practice has focused on a variety of matters including commercial transactions, customs and international trade matters, regulatory compliance, technology licensing and intellectual property issues. Stephanie currently serves as chair of the Association of Corporate Counsel’s (ACC) Law Department Management Committee and has served on the Massachusetts Bar Association’s (MBA) Business Law Section Council. She formerly served as counsel to the board of directors of Staples Foundation. She has coordinated and presented as a faculty member for both MBA and ACC education programs. She volunteers her time for Read to a Child, Wachusett Regional School District’s School Improvement Council, and Holden Youth Baseball/Softball.
Before joining Staples, Stephanie served as corporate counsel at OneSource Information Services Inc., in Concord, Mass., a leading provider of online business information to Fortune 500 companies. Prior to her role at OneSource, she was in private practice in Worcester, Mass. Stephanie received her law degree, cum laude, from Suffolk University Law School and her bachelor of arts degree in political science, magna cum laude, from Wheaton College in Massachusetts.
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