The notion of law firm partnering with in-house counsel was put under the microscope recently during the latest stop in Martindale-Hubbell's 2002 Counsel To Counsel series, a global initiative in which senior corporate counsel are invited to discuss best practices in delivering corporate legal services.

The session was held in Chicago on April 17, 2002, and was attended by 17 high-level corporate counsel from national and international companies, along with six senior partners at major law firms. Jonathan Hattenbach, director of commercial contracts at Motorola, and Noel Elfant, associate general counsel at Philip Services Corp., co-chaired the Martindale-Hubbell forum and were joined by in-house counsel from Bayer, McDonald's, Medtronic, Microsoft and several other companies. The event was co-hosted by the law firms of Eversheds, Kirkland & Ellis and Winston & Strawn.

Five major themes emerged at the Counsel To Counsel forum:

1. Corporate law departments are using fewer outside law firms, but forming closer relationships with those selected firms.

Several of the corporate counsel participants agreed that a fundamental principle for more effective law firm partnering is convergence. One in-house attorney from an international telecommunications company explained that his department conducted an exhaustive analysis of their needs and settled on a short list of 34 outside law firms with whom they are nurturing closer relations. The assistant general counsel from a major medical devices company commented that her company is emphasizing longer and more stable relationships with a shorter list of outside law firms, and the chief patent counsel for a leading process licensor in the petroleum industry said that it's important for in-house counsel to invest in the cultivation of relationships with their preferred firms.

2. Successful partnering requires the use of objective metrics in order to quantify the performance of outside law firms.

The associate general counsel for an international industrial engineering company introduced this point with a simple observation: Corporate executives and board members like to measure every aspect of the business, thus they don't see the legal function as any different. A senior corporate attorney for a global software company explained that her legal department actually takes this premise to the point of establishing clear metrics that measure litigation return on investment (ROI), transaction performance based on fees, and other proprietary criteria. These metrics are used to create rankings of law firms and then become a tool for the legal department to use in selecting firms for future assignments. Other participants agreed that clear performance measures should be put in place for outside law firms and that in-house counsel must meet with their law firm partners on a regular basis to review the results.

3. Outside law firms that provide legal services for the best value should be rewarded with referrals and more work.

Some of the participants commented that their companies are inclined to establish incentive compensation arrangements for their law firms, but the prevailing viewpoint was that the ultimate reward for good work is to refer more work to that firm. A managing claims attorney for one of the largest insurance companies in the U.S. explained that the law firms that are most budget-conscious about their assignments will be rewarded by the company with more future assignments. Another in-house counsel participant described the "power of law firm business referrals" to other work for his company, as well as referrals to other corporate clients.

4. Take advantage of new technologies that make it more efficient for in-house counsel to collaborate with outside law firms.

A number of in-house counsel agreed that technology can enhance the efficiencies to be gained with law firm partnering. For example, a corporate attorney for a major software developer remarked that her company uses secure Web portals – i.e., shared restricted communities between law firm partners and in-house counsel – to make it easier to collaborate on legal strategies. Partners from two of the law firms present discussed their growing use of Extranets as a resource for updating clients on work progress, maintaining close communications and collaborating on certain documents. Another in-house counsel participant shared that her company opens up some of their databases to select outside law firms in order to work more efficiently together.

5. Communication is the ultimate key to any law partnering relationship.

The final dominant theme for the session was the importance of open communication between in-house counsel and their law firms. This level of communication can take a wide range of forms. For example, the law department at a major telecommunications company has created a position known as the law firm manager; basically, this person's job is to serve as an advocate for the law firm partners by driving communication in both directions and seeing to it that the law firm partners receive appropriate training about the company’s various business units.

One of the law firm partners commented on the tremendous value of detailed weekly client email updates as a way to make sure that the communication is consistent. The associate general counsel at an industrial engineering company stressed the importance of law firms becoming fully aware of his corporate mission statement so that they can communicate within the same business framework. Moreover, the senior counsel at a company that is the leading producer of trucks and engines said that his outside law firms must get to know his company to represent them, so they typically give new attorneys plant tours and other hands-on experiences. And a corporate attorney for the largest global foodservice retailer said that his company routinely asks new outside counsel to spend a day working in one of their restaurants in order to see how things operate.