Editorial January/February 2010

Perhaps the clearest message from the 70-plus General Counsel attending this year`s In-House College – hosted by Iberian Lawyer with ESADE Law School – was the increasing requirement to get more from less and add more value to their business.

In one exercise, participants imagined returning to the office to find that management had been replaced by the legendary Albert John Dunlap, a ruthless US turnaround specialist and downsizer – better known as ‘Chainsaw Al’™ for the way he cut costs.

On entering the lift, they are confronted by Al with the blunt question: who are you and why do I need to keep you in my business?

As the lift doors close, they have just three or four minutes to justify their existence.

In-house lawyers admit their comfort trap: focusing on the day-to-day legal work, while perhaps neglecting the wider strategic and commercial benefits which internal lawyers can bring to a business. ‘I am helping the business be more profitable,’ would be a nice way to answer Al.

There is, of course, a parallel challenge for external legal advisers.

Some General Counsel are currently asking their external advisers: ‘How can you help us add value to our business?’ or ‘What can you offer me that I cannot get from less expensive law firms in this city?’

But there is some comfort for law firms. The College participants had unanimously reduced the fees they pay for ‘lower value’ work but maintained fee levels for what they perceive as ‘high value’ services.

Each knows clearly what high or low value means for their specific business, sector or regulatory environment, and the challenge is for their external lawyers to understand where the line falls.

Some Managing Partners are therefore taking a back to basics approach and asking each client where external lawyers can add the highest value in the current climate, while others are content to simply reduce their hourly rates across all of their services.

Participants at the upcoming In-House Club events will examine a range of current legal challenges – including cartel investigations, potential conflicts of interest among board members as well as risk management. And if Chainsaw Al were to ask why these issues are important, the participants can of course reply with a smile ‘to keep you out of prison’.