Realpolitik: The Law Firm General Counsel

Posted March 5, 2016; ©David Jargiello 2016 All Rights Reserved.

In a recent meeting with a partner from a very large, international law firm, I learned that they had shifted to an “office of general counsel” model for their internal legal function. In other words, they appointed a sort of “uber general counsel” and a number of ancillary/deputy general counsel with various titles and roles. This is not new as an organizational concept, but I always find it interesting when firms go this route. The model has certainly been floating around law firm management circles for many years. As a management principle, I personally associate the “office of general counsel” concept with government agencies and universities, although it is of course not limited to such. As a business matter, it strikes me as more “IBM” than “Apple,” but reasonable minds can differ on that characterization. There is certainly nothing wrong with a law firm “office of general counsel” per se. It is a perfectly legitimate way to organize the legal affairs of a big, diverse business enterprise.

Synthesizing many discussions I’ve had over the years, I think law firms choose to organize their legal function in this manner for four basic reasons that are not mutually exclusive …

#1 – The job is perceived as “too big” for one person in substance. So, the person who falls into the GC role at firm [A] is, say, a patent lawyer by training. The ramp as to business department risk management, litigation/claims management, law firm internal corporate/business strategy and hygiene, acquisitions, conflicts, insurance strategy, etc. is steep … . leading to compartmentalization and therefore multiple “general counsel” fiefdoms.

#2 – The job is perceived as “too big” for one person in lifestyle. Here, the person who falls into the GC role at firm [B] is looking for a lifestyle change and a staff-type role with regular hours. Rather than handle the calls from Shanghai at 3am Pacific, the firm appoints a “General Counsel Asia.” Ditto Europe, and maybe ditto US East Coast/West Coast.

#3 – The firm just thinks it “looks important” or “looks big” or that that’s what “big firms do.” Dubious logic, but I’ve nevertheless heard this articulated in a few different places over the years.

#4 – There is a scramble among lawyers to grab a piece of what I call “the general counsel pie.” Thus, lawyers with a need for a “firm contribution” and/or that are short on billable hours get deeply wedded to doing “general counsel work.” I’ve seen “office of general counsel” created at firms simply on this premise alone, i.e., that partner [x] has “always owned claims and it is part of his or her comp” while special counsel [y] has always owned [whatever] and “needs the hours,” with the net result that the firm goes with a distributed (and disjointed) internal legal function by political default.

In the final analysis, if you look across the legal industry and ask “how do law firms manage their internal legal function” in my opinion you see a crazy quilt … . There are firms that sport an internal legal function created through politics, those with people that have fallen into such roles by default, and those that have thought the matter through strategically. Law firm “general counsel” therefore run the gamut from conflicts checkers on one end of the spectrum, to very senior strategic advisors – consigliere – on the other, with infinite shades of gray in between.

Thus, while much has been written by many about the emergence of the law firm general counsel as a fixture in law firm management (see, e.g., Hazard (Lawyer for Lawyers, The Emerging Role of Law Firm General Counsel), Rotunda (Law Firms Creating In-House Ethics Counsel), and Richmond (Essential Principles for Law Firm General Counsel)), as it regards the in-the-trenches role of law firm general counsel, in my view it is wise to beware generalization or “conforming” to what one perceives other firms to be doing.

A few thoughts in closing …

1 – In my view, the internal legal team a law firm should suit the needs of the business as such are envisioned by management at any particular point in time. That means one structures the internal legal team rather than letting it arise by default or politics (at least as much as practicable).

Sound Bite:  Great businesses make the tough decisions.

2 – In my view, the general counsel of a complex law firm should be one person (not a group) that (a) is a consigliere to senior management, (b) is known to partners worldwide, © exhibits the gravitas to advise partners and manage their practice behavior worldwide, and (d) is available whenever the enterprise needs anytime and anywhere in the world.

Sound Bite:  The proverbial buck needs to stop with a person.

3 – In my view, the management of risk is a considered business decision and a competitive weapon. As a historical note, because thoughtful, intelligent risk management was woven into the fabric of the dot-com era Venture Law Group, we could take what only appeared to the uninformed to be substantial risk.

Sound Bite:  Engineers not cowboys.

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