Outside Counsel Guidelines: Law firm leaders and clients debate best approaches to client-firm dynamics

May 18, 2022

Finding common purpose for clients and lawyers and building efficiencies within a trusted and fair partnership is predicated on understanding and adherence to outside counsel guidelines (OCG). This was the key theme of the third annual Midwest and West Coast Outside Counsel Guidelines and E-Billing Roundtable, hosted by Sandpiper Partners.

Williams Lea CEO, Clare Hart joined law firm leaders and heads of client legal operations in an engaging panel discussion, debating the best approaches to meeting strictly enforced and increasingly complex OCG requirements.

Here are the top takeaways from the event:

Keeping track of client outside counsel guidelines remains the biggest concern among law firms

Live polling of the audience revealed that 74% of the audience was concerned about keeping track of outside counsel guidelines and managing updates for each client. The increasing volume and complexity of outside counsel guidelines (51%) and its subsequent impact on billing teams and processes (51%), followed behind as joint second placed concerns.

The panel discussed the continuous challenge of keeping guidelines organized and highlighted the divide between in-house general counsel and attorneys at law firms, as a senior leader of a top global law firm pointed out, “There seems to be a logical divide between what’s important to in-house lawyers versus the law firm lawyers.” A law firm client panelist emphasized that the main purpose of outside counsel guidelines is to simplify matters for them, “The impetus for us is to standardize our terms with outside counsel guidelines across a variety of areas as well as to streamline the operations of opening new matters. It just it simplifies things for us.”

There was agreement that managing solely to outside counsel guidelines does not give firms and their clients enough flexibility and that finding a middle ground keeps processes running smoothly. One client noted: “We keep an ongoing relationship with law firms we want to do business with, and we want outside counsel guidelines to govern that relationship. Then we have engagement letters that are really just in place to govern that that piece of work. I think that way, you’re just negotiating the guidelines once you’re renewing with them or updating them every couple of years. I don’t want to be in a business where I’m negotiating engagement letters for every single project.”

Law firm leaders recognize that transparency and direct communication are key to finding common ground

After hearing the clients’ perspective on outside counsel guidelines, a panel of law firm leaders agreed that guidelines have evolved from just billing instructions to provisions in multiple areas, such as cyber and data privacy, conflicts of interest and subcontractor flow down.

Although law firms are taking slightly different approaches to outside counsel guidelines, the panel agreed that transparency and clear communication is necessary when reconciling issues. As a leader of a global law firm said, “We do spend a lot of time with our clients at the outset talking about complex issues and how a global law firm like ours views them. We try to be really transparent and communicative with our clients about how we can bundle the conflict provisions to match expectations with regulatory requirements and business needs. We try to be very creative and very in-sync with what our clients want, but also with what our own practitioners feel is important in order to be commercial and reasonable.”

Another law firm leader pointed out that direct communication with the right specialist at the client can help break down barriers: “I think the challenge from the law firm side is oftentimes not having anyone to talk to”, she stated, “The language [in the outside counsel guidelines] often causes law firms more concern, trying to understand the intent. If we have an opportunity to have a conversation with somebody at our client who is an architect of the outside counsel guidelines and explain, we can actually come to that agreement. Sometimes we don’t have that direct communication.”

“I get the sense from clients that a lot of what really matters to clients are the operational functions, and how do we avoid churn and drag on billing and other important issues.” added another law firm panelist.

The right billing team combined with the right technology can ensure greater outside counsel guideline compliance and ensure faster payments

Clare Hart agreed that getting the right people involved throughout the e-billing process who can build a bridge between the law firm and the client is paramount. Establishing a strong team with the right skills to create billing narratives, proofread e-bills and ensure they meet the guidelines goes a long way to meeting this objective.

Highlighting how Williams Lea’s billing teams pick up the work of aligning billing to the agreed upon guidelines, Clare stated, “The outside counsel guidelines get handed to us and our billing teams to ensure two things: compliance and acceptance of e-bills into the client systems. We get the bills out, make sure we’re compliant and then ensure payment. We have a lot of people that have master’s degrees in English who really understand how to read and prepare documents.” She also stressed the importance of incorporating the right technology with the right people, “We also use rules-based technology to help us understand and automate some of this so that you’re actually even more confident that you’re not going to make mistakes around compliance.”

Dedicated billing teams using specialized technology to support e-billing and outside counsel guideline compliance enables better integration with firm and client legal teams and increases accuracy on the interpretation of outside counsel guidelines, thus speeding up payment times. “It’s become more complex,” said Clare, “But the good news is, our technology has also become more sophisticated. We’re developing technology that enables rules-based understanding and machine learning that constantly evolves. We have to constantly evolve with it. It’s a lot faster and more reliable when its technology doing that interpretation.”

Diversity, Equity & Inclusion remains top of the client agenda

It was no surprise that, when polled, 43% of the audience saw a large increase in client audits related to DE&I, with cybersecurity a distant second at 18%.

A client on the panel expressed how serious they take DE&I, “We expect law firms to staff our matters with at least 50% minority attorneys and to put those attorneys in leadership roles on our matters and we request data annually from our top 40 law firms by spend, asking them to report on a variety of firmwide and relationship data points. It’s largely based off the ABA model diversity survey, and we rank them one through 40. We tell them their score and we have discussion about opportunities to improve.”

Clients are not only putting the pressure on their law firms, they are also setting an example by looking within their own teams. “We have annual meetings with our firms every year with DE&I as part of that conversation”, said another major law firm client in the panel, “What we’re asking for is improvement, and we’ve been working with our own internal team to make sure our own inside counsel is responsible for making sure they’re getting staff that are diverse, so it’s not just all on a law firm.”

Overall, there was a clear consensus among the panelists that strong communication between clients and their law firms when agreeing and managing outside counsel guidelines is a key success factor. As one of the panelists said, “We want that make sure that we open up the discussion so that it can be had in a way that’s proactive for the relationship for the attorney to manage, both from a firm management approval process and interaction with the client.”

Clare Hart concluded, “There’s still a long road ahead of us to make sure we get outside counsel guidelines to a place where they can be interpreted in a way that’s understood clearly by everyone involved. We’re making sure we’re rigorous in the management of those outside counsel guidelines on behalf of law firms and then applying them to our billing, whether it’s e-billing or paper billing.”

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