Optimizing Communication as In-House Counsel

During the MSBA’s recent Legal Excellence Week, two very experienced corporate in-house lawyers discussed ways that in-house counsel can optimize communications with the leadership and management team of their company, external counsel, and the Board. Randolph Sergent, Vice President & Deputy General Counsel of CareFirst BlueCross BlueShield, and I. DeAndrei Drummond, Vice President, General Counsel, and Secretary of TEKsystems, Inc., discussed their experiences and best practices.  This article summarizes their presentation and provides the tips that both suggested on how to manage and optimize communications as in-house counsel. 

Your Role on Significant Matters and How to Prepare

Advising Executive Team. Anyone who has spent a day in the life as in-house counsel knows the role is very different from external counsel. In-house counsel must blend both legal expertise and deep knowledge of the business they are representing. Legal risks are one of many factors that the executive team of the company must consider when making decisions, and it is the job of in-house counsel to define those risks in a practical manner. Essentially, what your client, the corporation, wants from you as in-house counsel is to outline for the executive team how to do what they want to do within the boundaries of the law. Drummond stated, “for the most part, your clients don’t want to do anything wrong, but they do want to be aggressive with their business and get things accomplished, and they are looking to you to give them guidance.”  

In order to advise your executive team, Sergent stated an effective in-house counsel must know:  

• What is your client’s stated goal, and where does it fit with the company’s broader picture and with the industry, and how other industry players have addressed the problem?
• What is needed for “success” with this goal?
• Where are the “gives” and “takes” – what features, risks, planned operations, etc., are needed for the goal (must have), and which are ancillary (less important)?
• What is the risk of failing to achieve this goal? What is the risk if the company does not succeed?
• How can legal risks related to the goal be contextualized for business leadership?

External Counsel. External counsel are experts in the area of the law that you sought them out for, but they do not know your client’s business, how your company works, the culture, or your company’s mission. It is your job to fill this gap, to help your clients make better decisions in context, and to ensure that external counsel is focused on what your client needs and working efficiently to provide it. It is important for in-house counsel to learn how to select and manage external counsel effectively. 

Sergeant said in-house counsel should consider the following in order to use an outside expert effectively: 

• Have you obtained a basic level of understanding of the potential legal issues at stake before turning to external counsel?  
• How severe are the legal issues at stake? How important is the issue to the company for which support is sought?
• How deep do we need to go? Are we brainstorming, issue-spotting, defending past acts, or definitively proceeding with a course of action?
• What operational alternatives may exist based on your initial read of the law?
• Who are your internal business experts?

Tips for Working with and Managing Outside Counsel

“Communication is the key to managing outside counsel,” said Drummond. Remember that your company’s leadership is looking to you, as in-house counsel, to deliver a favorable outcome or mitigate business risks. But what that also means is that your external counsel needs to have a really good understanding of what your business strategy is and what your company is trying to accomplish. Finally, don’t forget that you remain ultimately responsible for the results of external counsel.

To effectively manage outside counsel, Drummond suggests you consider the following:

• Select “efficient” attorneys (select the attorney, not the firm) who know the area of law and communicate well with you. 
• Discuss the scope of the project and expected outcomes before you start – sometimes, a bullet point list of pertinent points is more helpful than a twelve-page memorandum of law.
• Give counsel some defined time for preliminary background research on your question.
• Based on the initial research, discuss the likely end product and outcome.
• Agree upon the work to get to that end product and obtain a budget estimate.
• Consider alternative fee arrangements, such as a flat fee or fee cap.
• Require firms to return to you if the budget is going off track.
• Consider billing guidelines, but do not make the guidelines too onerous.

Drummond stated for litigation matters, consider the following with external counsel:

• Match your expert outside counsel with the matter:
  • Routine litigation to be resolved at the lowest cost
  • The underlying issue of strategic importance requiring tactical or industry expertise
  • Government or other public matters requiring combined litigation and regulatory strategies
  • High profile litigation with Board oversight and reporting

• Expressly discuss the company’s objectives and expected outcome so external counsel understands the goal.
• Review the potential strategies with external counsel and obtain a budget estimate.
• Require firms to report on progress relative to the budget.
• Require discussion and approval of major litigation steps, and make revisions to the budget.

Tips for Choosing Outside Counsel

It is important to remember that boutique firms may offer value with highly specialized legal issues or with value rates. Many large national firms may provide administrative efficiency, but you may be passed from office to office without a handoff from your relationship partner at the firm. Choose the lawyer and not the firm.

Drummond also provided the following tips when choosing outside counsel:

• It is fair to assume that important business information is being shared with other attorneys at the firm handling your company matters.
• You should not have to re-educate attorneys at the same law firm regarding business objectives.
• You should know everyone at the firm that will be handling your matters, before the matter is passed on to a different lawyer at the same firm.

Tips for Working with your Leadership Team

“Business teams work best with actionable information targeted to key decisions,” said Sergent. You are responsible for the strategy and communicating it to the client. Usually, counsel and advice from external counsel is technical and focused on legal issues. Therefore, Sergent advised, “it is best to recast your advice to the leadership team by contextualizing the legal and business issues.” Drummond agreed adding that it is best to give your leadership team “very concise and very targeted simple advice that pinpoints the strategy, why the strategy is good or bad for your business and what you expect the outcome to be.” Sergent suggested that you focus on the executive team’s decisions points and outcomes regarding settlement versus pursuing litigation, modifications to programs, responses to external investigation or public inquiries and contract tradeoffs. Sergent also stated you should always remember that your leadership team wants to know “how to navigate the shoals, not what the shoals look like!”

Beware of business teams that concentrate on “getting away with it.” They invariably under weigh the true costs of intentionally violating a criminal or regulatory law, i.e. investigation, reputational risk, financial penalties. There is a difference between alternative defensible interpretations of the law and outright non-compliance. Engage your leadership team so that they consider the “costs” of non-compliance may be outweighed by the benefits of non-compliance.   

Sergent and Drummond recommended adding value to the leadership team by:

• Recasting legal issues in the context of your client’s objectives and challenges.
• Offering your opinion on what to do, not just options to pick.
• Be resourceful in achieving business objectives. Develop and propose alternatives.
• Focus on material risks and have courage to say what is not material
• Advise on the low probability outcomes – do not oversimplify, but separate the primary analysis from low-probability events.

Tips for Communicating with your Board

You should be talking to your Board regarding approval of significant transactions, such as joint ventures or acquisitions, settlement of major litigation requiring significant outcomes, matters of significant legal liability that require company defense, corporate crises with a legal component, including investigations and updates and strategy discussions on all of these.

When communicating with your Board, Sergent and Drummond offered the following tips: 

• Balance the Board’s limited time with the need to give the Board sufficient information to fulfill its duties.
• You and your management team are specialists, the Board members are generalists and are applying a reasonable person standard when making decisions.  Eliminate jargon and technical terms.
• Focus on the key facts needed to grasp the specific issues at hand.
• Legal processes are long, and outcomes are uncertain – set expectations for timing and the financial costs of litigation.
• On a complicated matter, the Board may not know which points are deal stoppers and which are minor issues. Indicate the importance and likelihood of issues, including risks, proposed resolutions, and alternatives.
• On matters of public interest or involving significant alleged wrongdoing, present a combined and unified legal, public relation and/or public policy strategy.
• Consider the Board’s fiduciary duties:
  • Has appropriate oversight been provided, including by the Board?
  • Are appropriate risks considered?
  • Have appropriate legal and non-legal experts been consulted?
  • Are any specific decisions documented and presented for a clear vote?
• Never overstate your role or the size of a problem for dramatic effect! Avoid trying to convince everyone in the room that you are the smartest person in the room. 

In sum. Your role in in-house counsel is not just about providing quality advice and counsel. It is critical that you learn the business processes and manage your relationships with the leadership and other management teams. Most importantly, it means providing solutions and helping your client get to where they are going, using external counsel when necessary. Sergent and Drummond’s overriding theme was to assist your client in accomplishing their goals and be careful not to become the department of “No!” They provided a quote by J.P. Morgan that summarized their presentation in a nutshell, “Well, I don’t know as I want a lawyer to tell me what I cannot do. I hire him to tell me how to do what I want to do.”

Presenters:

Randolph Sergent, Vice President & Deputy General Counsel, CareFirst BlueCross BlueShield. Sergent is a leader of a 25 lawyer, full service legal team, with extensive experience advising boards. C-suite executives, and other corporate leaders. He frequently serves as the point of communication between and among executive leadership, external counsel, regulators and external parties.

DeAndrei Drummond, Vice President, General Counsel and Secretary, TEKsystems, Inc. Drummond leads the full service global legal support for Teksystems, Inc., TEKsystems Global Services, LLC and other TEKsystems subsidiaries. He also counsels and serves as the primary point of contact between and among executive leaders, external counsel, and regulators.