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Oct 28, 2010

Spending and strategy are more important for a GC than lawyering

Report from ACC finds compliance and managing cost top general counsels' list of concerns

Dear readers,

No mater what we have going on in our lives, either personally or professionally, money always seems to be one of the most important things. This is borne out by the results of the latest Managing Outside Counsel Survey Report, compiled by the Association of Corporate Counsel (ACC) and Serengeti Law. It finds that controlling spending on outside counsel was the number one concern among in-house counsel last year.

I find a number of things interesting about the report, released at this week’s ACC annual conference in San Antonio, TX. While I do not doubt the results of the survey, I am surprised that outside legal spend was at the top of corporate counsel concerns. Every conversation I have with a general counsel or corporate secretary always starts with Dodd-Frank and the impact it is going o have on their job and their company.

Regulation, or more specifically, compliance with regulation, came in as the number two concern. It is probably worth noting that the surveying for the report was completed before we had a complete understanding of the finer points of the new regulations and what the new SEC rulemaking environment would look like. I would not be at all surprised if compliance and regulation issues top the list when the 2011 report comes out. We saw this trend in the years following Sarbanes-Oxley when survey participants told ACC that compliance was the most important thing. That abated over time but with the passage of Dodd-Frank I think the next few years may see a return to a focus on compliance. Just a little something to look forward too.

The second thing that I find surprising is that, on average, the amount of money spent on outside counsel was equal to last year. We have enjoyed a number of conversations about the role of law firms and the types of billing arrangements this year and while both sides are more willing to accept alternative fees, my general feeling is that prices continue to go up. I guess companies are spending smarter and getting more out of their legal providers. Good for them I say.

More than the overall finding, I think the report is most interesting as an evaluation of the changing relationship between companies and their law firms. The role of the in-house counsel is moving beyond just ‘lawyering’ and into the realm of business strategy. Many of you are becoming more project manager than general counsel. Increasingly, in-house lawyers are impacting hiring decisions beyond their own departments.

As a result, the offices of the general counsel and the corporate secretary are becoming more important, but with that growth comes problems. Many in-house counsels feel that they are struggling to keep up and others want more training and education on non-legal issues. Many law schools, by the way, are recognizing this trend and are starting to offer students dual tracking training in business and commerce.

In short, I think the results of the survey show that the burdens of managing a corporate legal department are becoming less about being a good lawyer (although that should always be the primary function) and more about strategic management and business development.

Law firms, for their part, are responding with more dynamic and transparent pay structures. Many are trying to expand their reach beyond just being a legal advisor to become a trust management partner. For example, many firms are proffering advice and opinions on non-legal governance matters. I see a lot of firms talking about the finer nuances of shareholder communication and public relations.

So, as more work comes in-house, you might want to look at the skill sets and experience on your team with a view to broadening the reach and importance of your department.

Oh, and by the way, if you want to get a sense of who is doing this best you might want to come to the Governance Awards. I promise this will be the second last time I bring it up. You only have 10 days to but tickets.

Brendan Sheehan

Brendan Sheehan is the former Executive Editor at Corporate Secretary magazine, and is a leading expert in public company governance and compliance. He regularly lectures on cutting edge governance, risk and compliance issues and is a regular...