The growth in esteem and influence of in-house lawyers over the past decade or so has been mirrored by the success of the Association of Corporate Counsel.
Originally a US affiliation of heads of legal departments and their teams, the organisation has become a federation of groups around the world, with more than 12 per cent of its overall membership based outside the States. It now has chapters in Europe, Canada, Argentina and Israel, with total membership tipping the 29,000 mark, covering 75 countries with lawyers from more than 10,000
corporations.
The Europeans are set to hold their 19th annual conference from 13-15 May in Amsterdam and, on the eve of that event, the ACC’s chairman, Jonathan Oviatt, the chief legal officer and corporate secretary at Minnesota-based Mayo Clinic, reinforced his view that in-house departments are at the cutting edge of international corporate affairs.

How has the position of in-house counsel evolved over the years? Many commentators suggest the global economic downturn has, ironically, had a positive impact on the status of general counsel. How has that enhanced position affected relations with law firms?
Inside counsel need outside counsel just as much as outside counsel need inside counsel. It is not an issue of good or bad, or who is more important – both sides are key players on delivering services.
Every chief legal officer and general counsel in the world gets up every day facing increasing pressure to do things better, faster, cheaper. I’m not sure that every private attorney in the world – or their managing attorneys – wakes up every day with that same thought. Fundamentally, that is the difference when we sit down with each other. The thing that makes it work is a long-term relationship and devoting people to managing that. There has to be more trust.
In-house counsel are very close to company business plans and they appreciate the need for companies to expect quality improvement. We are always expected to do things better, faster, and to be appropriately risk-averse, but not overly risk-averse.
Relations with outside counsel continue to be affected by factors in the structure, culture and history of private practice – it is a challenge to get outside counsel as engaged as in-house counsel in relation to those core issues – doing work better, faster, cheaper and being appropriately risk-averse.
It is an area I focus on a great deal with my department. At the association we have the ACC value challenge. We try not to preach to outside counsel, but to listen and understand the factors that impact on the relationship. The bottom line is that in-house counsel are increasingly skilled at project management, process engineering and all the types of disciplines that their companies use to achieve business goals. For a variety of reasons, outside counsel haven’t
had to become as engaged in that process of quality improvement and project management.
Legal work is like other shared services – the technology and human resources departments are expected to make these improvements. Every shared service is expected to do this.

Recent research has shown that legal departments at large US and UK corporations are becoming less enamoured with the large global law firms, and are instead turning to niche specialist practices. Are you getting that message from your membership, and is it a view you share personally?
The issue isn’t so much whether I instruct a global or niche law firm – it is whether the individuals at the firm and the overall culture of the firm is directed at developing long-term meaningful relationships with in-house clients, so you can have the type of planning, trust and standardisation that we do all the time in-house because we are a team working together.
The fundamental point is that the relationship between in-house counsel and outside counsel has been transaction and episodic-based, rather than looking at broad books of business – for which you could develop a billing structure that’s more sophisticated than just hourly billing, which is an antiquated method of billing for legal services. We need to move to a broader book of business and a relationship with firms through which can be developed outcome measures, the ability to define what is expected of both sides, and what might change things down the road in terms of the volume and value of work. Developing that sort of relationship takes a lot of work.
Arguably, it can be developed more easily with a niche law firm. For example, in the field of intellectual property – which for many in-house departments is one of the categories of highest spend – IP firms are much more specialised.
On the other hand, my company has a request for proposal out now looking to move a broad book of business and we’ve included multiple, unrelated areas. We would be open to a firm becoming the preferred partner, with whom we would develop alternative fee relationships.
That sort of arrangement would take a larger firm, especially as my company is global. So there is still an attraction to working with global firms – but it depends on the culture of the firm and whether it is focused on changing how it works and changing its relationships with in-house counsel.

Are law firms open to that mentality?
Those that are living in the past are doomed. But almost every firm is open to this approach. Most law firms have responded by saying
they are happy to engage. But if the conversation just moved towards them doing more work for a lower hourly rate, they would be quick to point out that was not the original basis of what
we were meant to be talking about.
Interestingly, the biggest deficit in the relationship is actually on the in-house counsel side. We still have more work to do in systematically evaluating and determining the blocks of work are that we are willing to contract to a law firm in an alternative fee process. We need to define the outcomes that we are trying to achieve and assess the total value of specific blocks of work. Take, for example, all of my trademark copyright work worldwide – if I do that for ‘x’ dollars with a law firm, am I comfortable doing that knowing that some years the volumes will be higher or lower?

Legal process outsourcing is meant to be the talking point at all in-house legal departments. Is it a serious business tool, or a flash in the pan?
The trend will continue, but outside law firms are not precluded from the process. However, if outside law firms don’t fill the need in relation to cheaper and commoditised work, then others will fill it.

Are law firms becoming better business partners – in other words, are they offering business-savvy advice as opposed to pure legal advice?
Risk aversion is a fascinating issue. What often frustrates in-house counsel is that outside counsel will say: ‘That’s a business judgement,’ and that’s the end of the discussion. They won’t weigh in on that point because they don’t make business judgements. As in-house counsel, we are making risk assessments every day and we have to decide whether it is worth raising these issues with our client.
Outside counsel can’t be expected to do that if they think that the first time they make the smallest error, the entire firm is going to be fired. That is another point about building relationships and managing expectations so that outside counsel can start to drive work down to the least expensive, but competent personnel in their organisation. At the moment, there is still too much of a tendency for law firms to keep work at a higher level or keep more expensive individuals involved in it just to make sure clients feel they are getting appropriate attention.
You need to have an honest discussion about what is commoditised work, what is low-risk work, what work can be done on the basis that good is good enough and perfect isn’t what we are trying to achieve.
The problem is that most outside counsel take the view that if they deliver work that is just good enough, in many cases that will be the end of their relationship with the client. But we rarely want to pay for the perfect; we don’t need it.

You’ve been involved with the Association of Corporate Counsel for more than a decade – long enough to get to the heart of the organisation. What is it meant to do and does it achieve those goals?
Its purpose is to be by in-house counsel, for in-house counsel. Many other legal organisations include
in-house counsel and outside counsel, but ACC’s strength is its
in-house membership.
We’ve just refreshed the ACC’s strategic plan at our February board meeting. It was a one-year process and we had input from more than 4,000 members.
The most satisfying result from the 4,000 interviews was the very high satisfaction level they had. The board and the staff of the ACC interpret that reaction as meaning that we don’t need to make a significant change to what we are doing – we need to continue to do more of it.
The association has three areas of significant focus for our members: to facilitate exchanges of information among members; to optimise our services and retain our current membership; and something we call ACC advocacy – campaigning on issues such as attorney-client privilege and multi-jurisdictional practice. But whenever we take an advocacy position, it has to have a significant in-house perspective – we try to stay very focused.
We also look for a commonality of opinion – in other words, if it is of interest to in-house lawyers – but our membership would be split 50:50 on the issue – we would probably not take a strong position.
We are also flexible enough to realise the needs of ACC Europe are likely to be different from the needs of, say, ACC Canada or ACC US.

CV -- Jonathan Oviatt

Chief legal officer and corporate secretary at the Minnesota-based Mayo Clinic, an academic medical centre with US and international programmes in clinical practice, medical education, and medical research.  The clinic has annual revenues of more than $8 billion and 56,000 employees.
In addition to being chairman of the board of directors of the Association of Corporate Counsel, he is also a member of the advisory board of the US northern division of The Salvation Army.
He graduated with a law degree from the University of Minnesota.