Delivering Value
to Corporate Clients
Steven A. Lauer
Lauer & Associates
Kenneth L. Vermilion
Wal-Mart Stores, Inc.
Dial in US & Canada (toll free): 1-866-640-4044
Dial in International (toll): +1-678-302-3554
Participant Code: 969427
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Questions will be
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Value
• Legal service exists to serve a specific goal
– Negotiate and/or conclude a transaction
– Represent a party in a dispute (or litigation)
– Advise a client regarding legal risks or opportunities
• To the degree the legal service enables the client
to achieve the client’s goal, that service has value
for that client
• Value must be as defined by the client/business
A definition
• The value of legal service consists of the
degree to which that service assists or enables
the client to achieve the client’s business goal
with an associated cost not disproportionate
to that goal
Elements or types of value
• Service value: the benefit to the client when
counsel performs his/her role as agreed
• Expertise value: lawyer delivers technical
know-how
• Commercial value: lawyer understands client’s
business and delivers commercially useful
advice
• Business leader: lawyer provides to client
strategic direction
The value of in-house counsel
• Earlier identification of issues with legal
ramification for the business
• Consideration of legal issues more integrated
into business transactions
• Institutional knowledge of the business
• Familiarity with business professionals
• Familiarity with operation and its legal context
• Internal vantage point leads to strategic view
The value of outside counsel
• The value added by outside legal resources (including
outside counsel) “starts where the in-house focus
ends” (General Counsel Survey 2009 by FrahanBlondé, p. 9)
• Strengths of outside counsel:
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No competition for resources
Sometimes viewed as more entitled to claim privilege
Representation of multiple clients provides broader view
More in touch with judicial rules and other procedures
More resources to stay in touch with legal developments
Attributes of outside counsel
highly valued by in-house attorneys
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Teamwork
Reliability
Flexibility
Collaboration
– With in-house attorneys
– with other outside attorneys
• Cost awareness and cost certainty
• Speed
• Project management talent
Value varies
• The value of legal service varies
– By client (Prudential vs. MetLife)
– By law firm (Cravath for slip-and-fall cases?)
• The client’s view is pre-eminent
• Value can vary over the course of an
assignment due to circumstances beyond the
control of client and counsel
Firm-related factors that affect value
• How well it works with in-house counsel
• Do firm’s lawyers understand importance of a
certain and swift resolution?
• Do outside lawyers augment law department’s
capabilities with minimal duplication?
• Will cost outweigh contribution to achieving
business goals?
• Does client ascribe value to the “name”
Value varies even more
• The same firm working with two different
clients on similar matters may deliver different
values
• Same client working with two firms on similar
matters may derive different values
• The nature of the work will affect the value
delivered
Work-related factors that affect value
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Level of difficulty or novelty of legal issues
Potential impacts of the work on the business
Number of parties
Geographic scope of the factual situation
Other factors
– Potential personal liability of corporate officer
– Personal investment in dispute by officer
Fees and value
• Alternative fee arrangements do not equate
with greater value necessarily
• Fee arrangement should incorporate
incentives that support achieving the goal
• Value might result from the following:
– Time spent
– Expertise applied
– Familiarity with process
Unbundling – what is it?
• Unbundling is “any process in which
something complex is broken down into
smaller and simpler components. In the legal
context, ‘unbundling’ refers to the process of
breaking down the multiple roles an attorney
might play into smaller simpler groups of
tasks.” (F. Masten & L. Borden, Unbundled Legal Services,
posted at http://www.zorza.net/resources/Ethics/mastenborden.htm)
Unbundling – why?
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Cost
Specialization
Consistency
expertise
Unbundling – how?
• A law department proactively manages the
various aspects of the work and assigns it to
the “appropriate counsel”
• Can a law firm unbundle work?
Project management
• More focus on well-defined goals shared and
commonly understood by client and counsel
• Plans and steps
• Identification of appropriate resources at the
right time
• Measurement of progress (metrics)
Hurdles to realizing greater value
• Communication failures between in-house
and outside counsel
• Failures to fully delineate responsibilities
• Failures to “play well together”
• Legal profession is, by nature, conservative
and resistant to change
• Lack of commonly held lexicon for risk
Law firms should embrace value
• When firms bill only on the basis of hourly
rates, they invite comparisons among them on
that basis
• Delivery of “value” apart from the time
devoted to a task enables a firm to positively
differentiate itself more uniquely and with less
risk of comparison to others
Steve Lauer
• Over ten years of experience assisting corporate
law departments and law firms to increase the
value of legal service for corporate clients
• Over 16 years as in-house counsel
• Author of The Value-Able Law Department (2010),
Managing Your Relationship with External Counsel
(2009) and Conditional, Contingent and Other
Alternative Fee Arrangements (1999)
• Frequent speaker and author on law department
management, relationships between in-house and
outside counsel, compliance and related topics
• Co-Chair, ABA Section of Business Law’s Corporate
Compliance Committee
• Vice Chair, ABA Section of Business Law’s Corporate
Counsel Committee
Ken Vermilion
• Senior Director Legal Department Operations and
Finance, Wal-Mart Stores, Inc.
• Manages the selection, deployment and use of
legal department-specific software and
technology platforms
• Manages long-term financial planning and annual
budget process, monthly forecasting of financial
closing processes and management reporting and
metrics, plus project-specific work as directed by
Exec. VP and General Counsel
• Prior work in financial and treasury management
functions and as first Director of Legal
Department Operations for Sears, Roebuck and
Co.
Thank you very much.
Questions?
Steven A. Lauer
973-207-3741 (cell)
slauer@carolina.rr.com