Why Use an Outsourced Legal Department? (II)
By Jonathan Wachs, Offit Kurman
Why should an organization consider using an outsourced legal department? This series takes a look at some of the most compelling reasons to engage a third-party lawyer or team of lawyers to meet your legal needs. Part II.
Reason #2 to Consider an Outsourced Legal Department: Client Relationship Managers
Communication between a company’s senior management and its legal team sometimes resembles the children’s game “telephone.”
Say that a rapidly growing company needs a bank loan to maintain its momentum. Strapped for time, the CEO makes a personal guarantee of $1 million to the lender, soon realizes this may be an error, and relays his uncertainty to one of the company’s managers. The manager calls the company’s law firm partner, telling her the CEO is anxious about the terms of the loan agreement. The partner asks her associate to look into the matter. The associate reviews the agreement, shares his opinion with the partner, and the legal team’s guidance then travels back up through the chain. By the time it reaches the CEO, the purpose of the initial communication has been lost. Even though the agreement may be legally sound, no one was looking out for the executive, who is now on the hook for a million dollars.
Situations like the one described above frequently occur in the fast-paced world of startups. In fact, as reported in The Boston Globe, Karmaloop CEO Greg Selkoe currently owes $5 million due to a comparable mistake. While one cannot and should not hold Karmaloop’s legal team responsible, it’s plainly evident how mismanaged communication between one department and another can lead to a situation like the one in which Selkoe finds himself. As a company grows quickly, it needs embedded legal guidance that moves at the speed of business, takes long-term strategy into account, and does not constitute a fixed-cost full time equivalent. In short, legal and the executive suite need alignment through better communication.
Achieving alignment, however, will take more than shared intentions. A company’s top decision makers have neither time or expertise needed to property managed the company’s legal department. Even when they both commit to a culture of open and consistent communication, the two sides at times may lack a common language, and their relationship suffers as a result.
An outsourced legal department prioritizes relationship management by design. Client Relationship Managers bridge the gap between businesses and legal offices, relaying information between both parties while staying true to either party’s best interests. A Client Relationship Manager will take the time needed to understand the company’s sensitivities, forms, procedures, budgets, and deadlines, exercising the amount of oversight desired by the company without adding a substantial layer of cost.
In addition to improving communication and helping your employees stay focused on organizational goals, Client Relationship Managers also enable every member of your team to see and understand risks proactively. Client Relationship Managers deliver regular status reports, so you can catch inefficiencies or miscommunications in your organization before they become problematic. Status reports ensure that the most appropriate person is handling is each project properly, and allow you to evaluate all current and proposed legal efforts in a dashboard-style overview, so you can add, revise, defer, or cancel projects without adversely affecting your company’s overall legal strategy or budget.
This arrangement allows an attorney to act not only as an advocate for your business in times of crisis, but work alongside you as a strategic advisor during projects intended to grow your business. Consider the benefits of an independent consultant who understands your business and has a background in complex areas of law. Customer Relationship Managers blend project management skills with knowledge of relevant legal matters and insight into the strengths and limitations of available resources. They can recommend the best production lawyers for each assigned project, and know how to communicate your specific expectations and deadlines.
In cases where the Client Relationship Manager works as part of a full-service firm which employs lawyers in many practice areas with different levels of experience, Client Relationship Managers have the flexibility to customize a legal team that meets the evolving needs of your business. In addition, Customer Relationship Managers can integrate internal and external resources—such as attorneys at the firm, your in-house counsel and contract managers, as well as co-counsel and non-attorneys—to design and manage a virtual legal team dedicated to serving your organization. Your company can replace or supplement your Client Relationship Manager, in accordance with your business’ needs over time, without sacrificing institutional knowledge.
Backed by a law firm, Client Relationship Managers offer a more expansive scope of information than a one-person, in-house legal department can provide. Unlike conventional private practices, outsourced legal departments incentivize attorneys to collaborate with each other. If your Client Relationship Manager is unfamiliar with a certain legal matter, there is no financial downside to asking a colleague for assistance. When your lawyers’ objectives are aligned with your own, work gets done faster; morale remains high; and your budget stays in control.
Finally, Client Relationship Managers are available to make regular onsite visits to participate in senior team meetings or deliver status reports. This level of commitment gives an attorney the kind of access only members of an in-house department would have otherwise, without the burden of organizational politics. Imagine applying a senior level attorney’s wide field of vision to your regular sales, marketing, human resources, accounts, or board meetings. As a member of an outsourced legal department at less than the cost of hiring a full-time legal employee, a Client Relationship Manager is in a better position to speak about larger trends and experiences with others within your industry.
To meet the needs of today’s dynamic organizations, Offit Kurman has developed New Paradigm Counsel®: a service offering through which Offit Kurman develops and delivers outsourced, customized legal departments. For less than the cost of traditional law firm engagement, New Paradigm Counsel provides clients with access to Offit Kurman’s comprehensive suite of legal services.
To read past articles in this series click one of the following:
Jonathan WachsOffit Kurman, Baltimore, United States
T: +1 301 575 0302
Jonathan Wachs provides strategic counseling and operational advice to clients in the areas of intellectual property, commercial transactions and outsourced legal departments. As head of the firm’s Intellectual Property Group, Mr. Wachs works closely with clients to develop, register, analyze, enforce, and transfer intellectual property assets in a customized, cost-efficient, and highly effective manner. Additionally, he conducts intellectual property audits through which clients learn the nature and value of their intellectual property assets and the steps needed to protect such assets from misappropriation or dilution. As a business lawyer, he has successfully negotiated and completed several multimillion dollar business transactions and has served as general counsel to several small and midsize businesses and organizations in various industries and professions. He also manages a blog about intellectual property issues, Friday Factoids. Mr. Wachs co-manages New Paradigm Counsel, a service through which Offit Kurman delivers customized, comprehensive and cost-effective outsourced legal departments. Through New Paradigm Counsel, Jon served as outsourced general counsel for a government contractor, a large printing business, a payment processing company and an identity theft restoration business.
Published: May 2016 l Photo: mooshny - Fotolia.com