Get More From Outside Counsel Guidelines with 3 Critical Conversations

Most companies have Outside Counsel Guidelines (OCG), but they're rarely read and often overlooked.

These guidelines matter.  In fact, they are generally thought to supersede the individual outside counsel’s engagement letters.  In a 2014 LexisNexis survey of in-house departments, 30% of respondents said they plan to develop billing guidelines and rules as a means to curtail outside spend.  In-house departments spend valuable time and resources on these guidelines in the hopes that the documentation will help them hold outside counsel accountable, standardize operational practices, stretch the law department budget, and ultimately, drive greater value and better performance from outside counsel. 

Outside counsel guidelines set forth the company’s expectations for outside counsel and typically cover areas such as billing, budget requirements, staffing, early case assessments, matter updates.  Setting standards across these areas and sharing that documentation with your business partners seems to make perfect sense… right?  Well, sort of.

OCG can be a double-edged sword

A company’s OCG can run anywhere from 10 pages to a few hundred pages.  In the case of the latter, I’d agree with former ACC General Counsel Susan Hackett that the idea of expecting anyone to become or remain conversant with the contents is absurd. 

Outside counsel guidelines are reference materials.  They're not meant to be read; they’re meant to be consulted as need arises.

As the saying goes, out of sight, out of mind. Like all reference materials, they're not useful until they're needed. Once the guidelines are filed away, there's no guarantee that outside counsel will remember that they exist.  

The real trouble arises when either party treats the OCG as a proxy for dialogue.  Simply distributing the document doesn’t guarantee compliance by outside firms because a “rulebook,” to borrow Susan’s characterization, can’t replace interactions.  From the law firm perspective, poorly executed guidelines can have a chilling effect on an important driver of good relationships: the willingness to ask questions. 

Your OCG is one building block 

While some aspects of legal service delivery are straightforward and can be reduced to a cut-and-dry description of the mechanics, there’s still a lot to relationship management that is subjective and situational. 

No document, however well-intentioned, can replace a thoughtful discussion. Whether your relationship with your outside counsel is long-standing or new, you should make time to review the guidelines with your outside counsel.  

Conversations on scope, budget, timelines, and success criteria are critical because they’re often unique to each department and sometimes dependent on a company’s business processes and accountability metrics. Dialogue creates context and understanding, so that outside counsel understand the rationale and intent behind the mechanics documented in your guidelines.

Three critical conversations 

Driving performance requires a basis of collaboration and open communication.  The following conversations are absolutely necessary first steps toward a high-performance approach to outside counsel management.  

Expectations, goals, and culture

You want your outside counsel to understand your business and your internal clients. Certainly, they should do their homework on readily available information, but some of the most valuable aspects—your company's culture, unique protocols, stakeholder personalities and preferences—can't be codified and documented, and they’re not in the public domain.

Envision what your ideal outside counsel relationship looks and feels like.  Give examples.  Tell anecdotes.

The outside counsel who are willing to invest time for these conversations are the ones who will learn to discern when they should consult the OCG and when to pick up the phone. 

Success criteria and metrics

Context helps outside counsel understand both the letter and the spirit of your operational guidelines around billing, budgeting, and reporting.

These are the questions that should shape and inform the definition of success criteria and design of performance metrics for your outside counsel.

From a strategic standpoint, what does success look like for you and your team? Which legal issues are most critical to your internal clients' business objectives? How can your outside counsel best serve up the information and analysis you need?  From an operational standpoint, what are the expectations and pressures placed on the law department? How can outside firms manage operational aspects to make you look good?  

Lessons learned

Effectively managing your outside counsel and holding them accountable means you are communicating what is working well, what is not working so well, and the reasons for both.

Lessons learned discussions ensure that areas of non-compliance or poor performance are surfaced and addressed on a timely basis.

These are the discussions that spur real improvements, but they're not always easy to initiate. That's why it's helpful to commit to a structured conversation to explore lessons learned—ideally, with a regular cadence. 

From dialogue to compliance to performance 

Creating a foundation of trust and candor is a necessary first step. What comes next?  

Establishing and explaining rules aren't enough to influence behavior. You need more tools—both carrot and stick—at your disposal.

When you have the right business processes in place, you make compliance the default option. When you have real-time visibility over workflows, you have the ability to surface and address non-compliance on a timely basis.  When you establish the right metrics, you can create incentives for outside counsel that better align their interests to yours.    

Holding outside counsel accountable doesn't have to be a dilemma, but you need a multi-pronged approach that goes beyond your outside counsel guidelines.  

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