North west clients – The delivery business

To mark our Regional Insight report, we teamed up with Weightmans to assemble a group of senior in-house counsel in the north west.

A discussion over added value in legal services typically begins with a discussion of what the term actually means. Right off the bat, Celia Tierney of Stockport Metropolitan Borough Council points out that the phrase ‘best value’ was coined by the public sector, as local government bodies have been required to provide this in their services for a considerable amount of time. On the other hand, Tyco’s regional general counsel (GC) EMEA, David Symonds, sums it up for most when he says: ‘The primary driver that we are judged by is how much we spend externally.’

‘There is a lot of emotional value that lawyers can add,’ says Paul Taylor, EMEA counsel at Pearson VUE. ‘I am most useful to the business getting involved in deals or strategic conversations early on in the process before anyone has even thought about drafting a document, doing legal research, or going to outside counsel.’

Being valued and delivering value, according to Taylor, boil down to becoming a trusted business partner rather than expecting to be treated like one. Such a transformation only takes place if an in-house lawyer changes their behaviour to achieve buy-in internally.

‘We have a lot of traits that are really valuable in the business world, such as that ability to see an overview and piece things together, and asking stupid questions,’ he says. ‘That is one of the most powerful things and the biggest value you can add, because when you put your legal hat on you are allowed to ask stupid questions; you are allowed to say: “I don’t get it”.’

The problem, says Symonds, is high turnover of commercial staff means that in-house counsel often build strong relationships with co-workers in the rest of the business only to see them move or being promoted to another part of the business. Somebody else comes in, and the process begins all over again. The process of adding value is incremental.

Jennifer Foote, company secretary at The Manchester College Group, suggests that, for the in-house lawyer, it can be difficult to demonstrate the value of the role.

‘A division which contributes financially to the organisation can easily evidence its financial worth. Whereas there is a risk that legal services can be perceived as a drain on resources. Sometimes I think that your value is only truly known when you leave. And it is only when you do go and there is that gap that they think: “Actually, I do realise what they did, because it is not happening as well or as often now.”’

For private practice lawyers, delivering value to clients is about understanding the clients’ business, according to Weightmans partner Paul Raftery, particularly in the shift towards greater regulatory scrutiny in various industry sectors. To deal with a one-off piece of litigation, he says, you do not necessarily have to know the whole of the business. To deal with risk avoidance and governance, you have to have a view of the whole business. In terms of external suppliers, he concedes that accountants have an advantage as finance and audit are daily functions, giving them far more contact than lawyers would have on a piece-by-piece basis with the business.

This also speaks to the preconception that exists of lawyers, comments Symonds. ‘The challenge that lawyers face is to overcome this perception that if you involve a lawyer, they will tell you what the problems are and all the reasons why you cannot do it. The business does not need all the workings out, it just needs the answer.’

That said, he argues that any measures in-house teams take to deliver a commercial edge are irrelevant if the department is not managing costs down year-on-year and performing on key financial metrics. Symonds says that part of the value he delivers is in committing to reducing legal spend by a set percentage every year. If other areas of the business can budget, he says, then it makes the legal department seem more business-orientated, rather than a mere drain on costs, if it does likewise.

According to Mike O’Connell, head of legal services at Mid Yorkshire Hospitals NHS Trust, reputation takes a long time to build up and a short time to lose. ‘A lot of what we do you cannot put a figure on, in terms of how much you have saved or how beneficial it was,’ he observes.

When asked if external counsel are as invested in the concept of adding value as their clients, Taylor argues that a failure of law firms is not to charge more for the really high-level thinking and less for the commoditised parts of a job. Dan Cutts, senior partner at Weightmans, counters that often clients are not sophisticated enough in their purchasing techniques.

‘We have a lot of people in the market say: “Lawyers are not very innovative in the way that they charge.” Yet we take capped fees, cushioned fees, individual fixed fees for litigation, single fixed fees for a whole piece of litigation. But people do not buy innovatively, either. They often default to the hourly rate. If somebody came to me and said, “We will pay you loads more for the clever stuff” then fine.’

Symonds concedes that there is an element of in-house counsel wanting to have their cake and eat it. That said, he reports that his finance team do prefer fixed or capped fees for external legal work, as they enjoy the certainty of cost. Meanwhile, Stephen Parry from the legal team at The Co-operative Group says that fixed and capped fees work well for transactional work but when it’s for something non-transactional and hourly fees are used, it is difficult to have a pragmatic conversation with a law firm about how much a matter is going to cost.

The conversation then turned to gauging less quantifiable areas where in-house teams can contribute to the business. Symonds argues that the biggest mistake that in-house legal teams make is not communicating with other parts of the business enough – demonstrating results empirically, be that through a newsletter or a client satisfaction survey.

Cutts points towards the number of GCs globally at the very top of executive management as a sign of the value that a legal mind can bring to a company. However, Raftery adds that this is the function of the increasing importance of risk and compliance issues for global corporates that they cannot afford not to have GCs on the front line. To this, Taylor argues that the role of the in-house lawyer must adapt to be more of a trusted adviser because if the profession doesn’t change then alternative providers such as Axiom will be far more cost-effective for nuts-and-bolts legal work – then the legal function will be outsourced just as well as other support services have been outsourced across businesses.

Ultimately, Foote sums up what it means for the in-house lawyer to deliver value: ‘If my CEO says, as he does, that he needs me as part of his negotiating team then that shows that I have value. I am a resource to be used proactively and not as a last resort to sort issues and limit damage after the event. This attitude then cascades down so that I get involved right from the start, rather than fire-fighting when things take a turn for the worse. Although my team cost the organisation, our advice long term actually preserves integrity and reputation – which can be priceless.’ LB

catherine.wycherley@legalease.co.uk