Sponsored briefing: Changing roles and expectations on the relationship between in-house legal counsels and law firms

The position of in-house legal counsel has been taking place effectively across the world since the beginning of the ’80s. This position comes forward with the headlines as in-house legal counsel, chief legal counsel (CLO), and head of legal are titles in common use nowadays. As these positions become widespread and with the proliferation of the legal departments in companies, the relationship between the law firms and in-house legal counsel has gained great importance.

The Relationship between In-House Legal Counsel and Law Firms

Taking numerous changes in today’s modern world into consideration, it can be easily said that the roles, perspectives and job descriptions of in-house legal counsel have been altered. Such change along with the various requirements has moved the longstanding relationship between in-house legal counsel and law firms to another dimension.

Let us consider the position that in-house legal counsel have reached. In a globalised world, the points that companies have reached and served have started to spread all over the world rather than a specific region while the growth rate of the companies has increased many times more. With the effect of that, economic environment, the competition dimension, the management perception and the changes on the distribution of tasks ended up with higher expectations from legal counsel such as taking commercial decisions, planning budgets, being aware of technological developments, shortly, working with full business awareness by effecting the in-house legal counsel’s perspective. Under these parameters, the companies offer enormous opportunities to legal counsel for innovation, leadership, and decision making at the highest levels – especially as companies have gone global. One of the most significant roles of in-house legal counsel, who started to have many hats such as risk manager, ethics and compliance officer, administrative official affairs, wise adviser, shows itself as ‘leadership’.

Looking at the last ten years’ in-house counsel positions, the in-house legal counsel had to work with and lead almost all departments within the company, it is an inevitable fact that today’s requirements have moved this figure into a position that conducts risk analysis and leads business decisions, even though we would be picturing a figure whose sole duty is evaluating the legal compliance of the decisions taken by the company and also trying to abstain to direct the commercial decisions. In the light of this reality, we can describe that the relationship and expectations between in-house legal counsel and law firms have evolved and transformed with the usual flow of the process. In order not to block off the flow, law firms are also expected to observe this process and keep up with today’s global and modern developments. The evolution of general counsel is examined through a conversation with the chief legal counsel of one of Turkey’s leading holdings who conveyed his experiences. He has observed this development by working in the same company for many years and witnessed that the profession has changed with the evolution of the opinion of legal view starting from compliance for technological developments well into commercial decisions. That was a great real-life experience.

A Role Comprising Strategy and Leadership

The expanding roles led lawyers to get more into the business world. Rather than evaluating the legal consequences of the commercial decisions taken by the company, law firms – which have the motive of efficiency, value and commercial awareness that shape the relationship between corporate identity and law – were among those preferred to be consulted by in-house legal counsel. Nowadays, the law offices that have a good grasp on the corporate memory of the represented company, are competent in assisting the company to achieve its strategic goals for different locations in a globalising world and which can expand its visions, stand out in this choice.

With the transition of in-house legal counsel from a figure just providing legal advice to a complex role covering strategy and leadership, the expectation that will affect the critical business decisions by providing a legal perspective as ‘more than a lawyer’ also shows itself for the law firms. The most significant reason for the increase of need for law firms are the growing business volume of in-house legal counsel and the expansion of the job description within the company. The emerging role of the law firms can be defined also the lawyers’ lawyer position. It can be easily said that while in-house legal counsel sit in the driver’s seat, the law firms are always ready for the duty as a co-pilot. Therefore, the need for an effective and powerful co-pilot brings out a search for quality.

The in-house legal counsel of a leading international company in the automotive sector, described this search as ‘effective, solution-oriented, fulfilling the requirements in a short time’ during a Legal 500 GC Summit. While ‘time, solution-oriented, correct and feasible answers’ increase preference, law firms, which can use their legal perspective on business-critical decisions within the scope of business strategy of the company, are in the leading role of the evaluated in-house legal counsel-law firm relationship.

Law firms that can use the legal perspective on critical decisions in terms of business within the scope of the company’s business strategy take the lead role of the transformed internal legal adviser-law firm relationship. The key issue is to understand the client’s business needs including its appetite for risk. At this point, the need for lawyers who blend law and commerce, follow up technological, economic and sectoral developments is not negligible. The evolution of the profession has also changed the definition of relationship management between in-house legal counsel and law firms. Being able to keep up with the fast-changing criteria and definitions that emerged in this context made the expanding role of lawyer more business-oriented. Adopting a critical role in managing corporate risk and strategic decisions, lawyers become the bilateral winner of this change and transformation.