With corporations cutting back on costs, ALB asked some of the leading in-house counsel in Australia and New Zealand what the biggest challenges will be for 2009
Q. What are some of the unique challenges presented by the global financial crisis for in-house counsel?
A. "The obvious challenge is greater efficiency - getting more value for money - but that is always present to some degree. What may be unique is that the need for greater efficiency is intensified, and occurring in an environment of changing problem sets, and novel and complex factual scenarios. So, in-house counsel may face cost-reduction imperatives and significant changes in the profile and volume of work. In this environment, there can also be greater need for lawyers who are particularly adept at investigating and distilling complex factual issues expeditiously. That is because strategy and outcomes may be driven less by purely legal issues and more by resolution of 'novel and complex facts'." - Eric Braun, former litigation counsel - Telstra Corporation, currently sole practitioner
Q. With companies downsizing, is it possible we might see more in-house counsel moving back into private practice?
A."I think it depends on the company and the industry as to how affected they are by the present economic conditions. In some cases, it may be more cost-efficient for a company to have in-house counsel than pay external legal fees. Although the advantage of a company using external lawyers is that it is a cost that is easier to turn on and off. Obviously in an economic downturn no-one is spared from redundancy, and in-house counsel is just as vulnerable as those in HR, marketing, etc. But at the same time, jobs are scarcer in private practice so I would not expect there to be a significant movement back into it." - Rebecca Davidson, Senior Counsel, Beca
Q. What problems have you commonly encountered when dealing with external law firms?
A. "A common challenge is to get a case evaluation early on in a litigious matter, based on a focused investigation of the key factual issues, so that the initial advice and strategy are not seen as unduly tentative or conditional. This is an area where specialist in-house litigation expertise can enhance the effectiveness of the external lawyers. Litigation is also sometimes seen as too much of a fixed 'process' with few genuine options to innovate, or to achieve early resolution of all parts of a matter. There is also the challenge of devising strategies, tailored to the client's business and systems that reduce the burden, time and expense of discovery and evidence preparation." - Eric Braun, former litigation counsel - Telstra Corporation, currently sole practitioner
Q. Do you maintain an official panel?
A. "It's not that we have developed a panel of law firms - we have legal professional advisors who come from certain firms ... I have come to know and respect them, and regard them as pre-eminent in their field - some of whom we have been working with for over 15 years." - Suzanne Reintals, General Counsel, Origin Energy.
Q. How has the global financial crisis affected your relationship with panel law firms and your selection criteria?
A. "Value, for one - the ability to add value and demonstrate familiarity with our business is always important, and has become even more of a focus in a more cost-conscious environment." - Rebecca Davidson, Senior Legal Counsel, Beca
Q. Is there more pressure on you now to reduce legal spend going forward in 2009?
A. No, I haven't been asked to reduce our legal spend. Our costs depend on how many challenges we have with our competitors either in defending or prosecuting. A lot of the work gets done in-house and I only outsource if there is no skill available to deal with it." - Nimalan Rutnam, General Counsel & Director, Proctor & Gamble
A. "We always seek to be cost-conscious about our legal spend. For good advice and where matters are of significant importance to Beca, spending money on legal advice is justified, but the bottom line is that we must be conscious as to all cost in this environment." - Rebecca Davidson, Senior Legal Counsel, Beca
Q. Is it time to begin to reassess the viability of time-based billing?
A. "I don't think this will occur generally in the marketplace, but you may see some types of work for which options such as fixed fees become more prominent. There is little attraction to clients in fixed-fee arrangements unless those arrangements usually (or invariably) result in lower fees. For that reason, there will always be some resistance from service providers. Non-time-based billing will generally put more emphasis on the potential long-term client relationship, and less on the fee outcome for a particular project. Alternative fee arrangements are also not just about 'working back' to a reference point based on hourly billing. It's important to try and find ways to define the work, perform it and charge for it so that its cost corresponds more closely to the commercial utility - from the clients perspective - of the work performed. All this involved some risk-taking by the provider. It can be easier for smaller providers who have greater flexibility - and lower overheads." - Eric Braun, former litigation counsel - Telstra Corporation, currently sole practitioner
Q. Is there more scope to use mid-tier and boutique firms as opposed to sticking with the top tier, to reduce costs?
A. "We don't go to the law firm we go to the individual" - Nimalan Rutnam, General Counsel & Director, Proctor & Gamble
A. "Our experience is that it is 'horses for courses' and some matters are dealt with more appropriately and cost effectively by top-tier firm, and others by a specialist or a mid-tier firm. So we never limit ourselves to any single tier, we work the whole field." - Rebecca Davidson, Senior Counsel, Beca ALB