Legal Management

Written Legal Advice: Distinguishing Production and Communication

A main reason why clients can't get from their lawyers the type of written advice they cherish (a concise one-pager) is that law firms produce memos to please the partners, not the clients. But there is a way to make both happy.

99% of clients value simple, concise, to-the-point, practical legal advice. They have little interest, or in most cases no interest at all, in the supporting legal analysis. When you ask lawyers what their clients want, they all seem to know this perfectly well: the client want a clear, concise and practical answer to his question. They know it, but they don't do it. Clients keep receiving long, legalistically-charged memos with detailed discussions of case law and endless footnotes. How come that law firms fail to produce what they know their clients are expecting?

Look at the production process in law firms. Legal advice is written by associates, then turned to a partner for review and signature. The partner wants to make a quality check, and rightly so. So, he needs to know how the associate has reached a particular conclusion, he wants to ensure that the associate has checked all relevant case law and legal articles, and has applied logic in the reasoning. He does not want to check the file, so all relevant facts must be presented at length in the memo. The associate must therefore spell out the entire background, analysis and reasoning in the memo. This is not useful for the client (the client is only interested in the practical conclusion), but associates feel they have to set out all the supporting sources and reasoning to pass the partners' quality check. And so, they keep producing memos that will make clients angry and resentful about legal fees.

The way to solve this is to distinguish the production process and the delivery process. Lawyers should not communicate the legal advice as they have produced it. The process of producing a memo requires legal analysis and reasoning, and a quality check of such analysis and reasoning is a must. So, lawyers must indeed put in writing their analysis and reasoning. But this has to do with the production side of the legal advice. The delivery side is a completely different issue. The question is: "Knowing that we have produced a legal advice based on a reliable analysis, what is the best way to present it to the client?" Most lawyers ignore this question, and simply forward the exhaustive  "production-stage memo" to the client. What the client receives is actually an internal memo that the law firm uses for its own purposes of quality check, and it makes clients turn red.

In practice, in addition to and on the basis of the memo that reflects the production of the legal advice, lawyers should prepare a separate "communication memo" that provides to the client exactly what he wants to know, in a manner as concise and to-the-point as possible. 

Antoine Henry de Frahan

Writing Skills: a Table of Contents

I am playing with the idea of writing a book about writing skills for lawyers. This is the table of contents I could use. If anyone as suggestions to improve it, be my guest!

1. ABOUT WRITTEN COMMUNICATION

• Why is writing very important?
• Why is writing no so important?
• What is the definition of excellence in writing?
• What do 99% of clients expect from written advice?
• When to use writing vs. other communication channels?
• How to integrate writing in a global communication to client?

2. CREATING VALUE THROUGH WRITING

• What is the #1 condition to create client value in documents?
• What is the biggest mistake of lawyers about the value of their documents? 
• What differentiates excellence criteria from basic requirements?
• Why do lawyers focus on the wrong excellence indicators? 
• What is the top criteria to assess whether a document is creating value?
• How to discover what sort of documents your client really want? 
• What does "solution-oriented" mean? 
• How to make documents more useful in practice? 

3. STRUCTURE

• Why must lawyers turn structure upside down?
• How to structure documents?
• How to structure paragraphs?
• Ho to create powerful headings and sub-headings?
• How to structure long documents?
• When and how to use executive summaries?

4. STYLE

4.1 Concision

• Why is concise writing essential?
• How to write in a short, concise way?
• How long should documents be?
• How long should paragraphs be?
• How long should sentences be?
• How to get rid of useless stuff?

4.2 Clarity

• How to increase clarity of ideas?
• How to increase clarity of language?
• How to increase clarity of layout?
• When and how to use tables, flow charts and graphs? 
• Why and how to avoid vague, ambiguous language?

4.3 Plain language

• Is writing in "plain language" a good idea?
• What is the story beyond "plain English"?
• How sophisticated should be your writing?

4.4 House style

• What should house style be about?
• How to move house style from wishful thinking to consistent performance?
• How to balance house style and personal style?

5. THE WRITING PROCESS

• How to get prepared for writing?
• How to produce a draft?
• How to do effective editing?
• How to check spelling and grammar?
• How to use readibility statistics?  

  

6. SPECIFIC WRITING 

• What are the top tips for writing emails?
• What are the the top tips for writing legal briefs?
• What are the top tips for writing newsletters?
• What are the top tips for writing articles?

  

7. META-WRITING

• Why does it take more than writing skills to produce outstanding documents?
• How to reconcile effective writing and protection of professional liability?
• How to combine shorter documents and higher fees?
• Why is effective writing a team performance?
• Why does it take change management to implement excellence in writing?
• How to use writing to create a distinctive, innovative and attractive identity for the firm?  

Antoine Henry de Frahan

FrahanBlondé General Counsel Survey 09

How is the crisis affecting the legal market?

What are the top priorities of general counsel?

What do general counsel think of hourly rates?

How do law firms get selected and how do they stay in the loop?

We have conducted face-to-face interviews with 22 leading general counsel of major companies. The 60-pages report holds priceless information on all key aspects of general counsel's collaboration with law firms. 

Participants include General Counsel of AB Inbev, Delhaize, Solvay, Belgacom, KBC, Dexia, GDFSUEZ, ING, UCB, GIMV, Umicore, Ackermans van Haaren, Telenet, Mobistar, GBL, De Post, Bekaert, Cofinimmo, Elia, Fluxys and Omega Pharma. 

For more information on this survey and its price, or to order a copy, please contact Sophie Peperstraete (speperstraete@frahanblonde.com)

About bonuses and indignation

Great indignation in the Belgian press yesterday. Guy Burton, the president of Ethias, a group providing insurance and banking services and Belgium 's second-largest insurer, received for years important bonuses, exceeding € 1 mio.

Nothing extraordinary really, except for the fact that “the bonuses were entirely and solely linked to the increase in turnover.”  Responding to the allegations, the group reluctantly admits that there was indeed an internal agreement, dating from the sixties (!), that linked the bonus of the president entirely to the increase in turnover.

Indignation and disbelief all over.

In most law firms, partner compensation and bonuses are linked to the turnover they produce. They are rarely linked to the contribution they make to the profits of the firm or to the long term added value they have created.

In most law firms, associate compensation and bonuses are solely linked to the billable hours they produce.

You know what is not surprising? Guy Burton is a lawyer by training.

Barend Blondé

Managing Partners: This Is Your Moment!

The crisis is hitting and it’s hitting harder every day. The so-called specialised legal press is reporting on law firm lay-off scores as if it were some kind of new sport. And since the recession strikes law firms with a slight delay, the gloomiest of times are probably still lying ahead of us. This is a good moment to go out on a limb for the managing partners of Europe’s law firms.

Despite the dreary challenges they are facing, we believe vast opportunities rise before them: they will finally be able to show how all this expensive and time-consuming ‘management stuff’ protects their firm against the woes of a deep crisis and, more importantly, they will dispose of the ammunition to do some true long term change management and further pilot their firms into a different 21st century.

Click here for the full article that appeared in the December issue of Toplegal International.

Barend Blondé

A Law Firm Is a Jazz Band

The ultimate challenge of law firms is to create synergy between the brilliant but colourful experts inhabiting them. Law firms like to use the metaphor of the symphonic orchestra to indicate how seamlessly members of the firm cooperate. However, law firms with the ambition to operate like a harmonious orchestra hit the wrong chord. Their leadership and management model for the firm is out of key.

Click here for the full article.

Barend Blondé

The Backbone of a Law Firm

Only a couple of months ago, the legal press reported extensively on the ‘War for Talent’ and on how law firms took measures, ranging from pay hikes, in-house business schools to alternative career paths, to fight ‘associate attrition’ and improve talent retention.  Today, a credit crisis later, the same pages are filled with news on redundancies and lay offs.

Both the credit crisis and the war for talent demonstrate two things.  First, there’s still too much fire fighting in human resources management.  Second, the legal business is still a “people” business, and developing a long-term vision on talent management is a key priority for any law firm.  Taking the ‘backbone perspective’ can help to develop such vision.

Click here to read the full article.

Barend Blondé

Lessons from a Failed IT Migration Project

Finding the right IT system is important, but preparing the migration to this new tool is equally important:

1. Make sure that the system is more efficient, more elegant and more user-friendly than the previous one. Does it take less clicks than before to get something?

2. Make sure the new tool is fully operational and debugged before the migration. Make a pilot, test it carefully and thoroughly, and make sure that it works when people are invited to use it.

3. Prepare carefully migration of data: address books, files, etc. Make sure that people will not have to enter again the data they have already entered in the previous system. Make sure they have all the information they need (addresses, files, passwords, etc.) fully available from the start.

4. Organise and prepare carefully a training session and make sure that an helpdesk is not just available but also proactive in the first few days.

5. Measure progress in use of the new system, and take immediate corrective actions if adoption of the new system is not progressing well.

Antoine Henry de Frahan

Poll Results: What are the Priorities of Legal Departments in Belgium?

We conducted a poll in May and June to find out the priorities of legal departments in Belgium. We have asked in-house counsel to select their top three priorities out of a list of ten options. We have also asked attorneys to do the same: do they now what are the priorities of their clients?

We thank all respondents, and are pleased to provide the results in this article, published on www.businesslawnet.eu.

Barend Blondé & Antoine Henry de Frahan

European Law Firms Will Become What They Measure

Increasingly, law firms and lawyers are compared, evaluated, judged, categorised, ranked and balanced. The Anglo-Saxon culture, generally more fond of rankings and statistics, has been dealing with the phenomenon for quite a while already, but now it is also hitting the rest of Europe at full strength. Metrics, numbers, benchmarks, ratios, targets… will become increasingly important in the management of law firms. Most lawyers are not comfortable with numbers but, unfortunately for them, this trend will not blow over. European law firms better get to terms with it. Click here to read the full article, published in the June issue of Toplegal International.

Towards 2018: Unlocking the Missing Link in Law Firm Management

What will bring the next decade for European law firms? What will 2018 look like for law firm management? Will technology have taken over? Law firms claim that they have made a quantum leap in management. But the best (worst?) is yet to come. Click here to read our full article, published in the April issue of TopLegal International.

The Ultimate Legal Writing Tip: Don't Write. Talk!

I am amazed by the number of legal memos and service proposals that could have been much shorter and far more effective if the writer had had a bit more of a preliminary conversation with the client.

Take the typical memo, where the attorney sets out all the options, all possible scenarios (if you are in situation A, then... and if you are in situation B, then...).  Question to the attorney: instead of spending hours investigating and writing about all possible legal consequences of client being in situation A, B, C or D, why didn’t you call the client and discuss with him in which of these situations he actually was? That would  have made your writing far more relevant, to-the-point, and shorter, and that’s exactly what clients are longing for.

I get many answers to that, from “From a professional liability viewpoint, you need to be extremely careful” (If you think that being to-the-point is too dangerous for you, maybe you should consider another career) to “I don’t want to trouble the client with an unsollicited phone call” (The truth is that clients are begging for their attorneys to be more proactive) to “I had a conversation but the client did not tell me his exact situation” (Did you ask?).

An answer I haven’t heard explicitly, and I sincerely hope that, indeed, it isn't playing a role, is that not asking about the specifics situation gives a justification to the attorney for writing a much longer memo and accordingly, invoicing a much higher fee.

Another answer I often get from associates, and that makes me despair of the legal profession, is “I agree with you, but I am not entitled to call the client. I have received this writing assignment from the partner, and he is the one with the client contact. I can only write the memo on the basis of the succinct info – and that is an overstatement - I have received from the partner.” I hear the voices saying, "Cut the middle man!"

Antoine Henry de Frahan

Hiring Outside Counsel: Legal vs. Purchasing

The tension between the legal department and the purchasing department when it comes to select outside counsel is certainly a matter of growing importance in many corporations, and should raise growing concern among law firms. It has to do with other hot issues such as legal costs savings, the transformation of legal services in commodities, performance metrics for law firms, the costs of cost savings, and ultimately power struggles among heads of departments in corporation. An interesting article on this appears on www.law.com.

Antoine Henry de Frahan

How Much is Your Firm Worth?

Valuation law firms is an exercise that will probably become easier as more law firms get listed on stock exchanges: you will simply have to look at the public share price. (There is already at least one law firm listed in Australia, and I bet we won’t have to wait for long before seeing some law firms IPOs in London), but until it becomes the norm, how can the value of a law firm be evaluated?

Law firm valuation may be needed in several circumstances: law firm mergers, sale of a law firm, transmission of the firm by the founder to the next generation, retirement plan for older lawyers, financial conditions for partnership step in for new partners, etc.

For example, assuming a private equity fund would like to take a 30% equity stake in your firm, and assuming this would be OK under bar rules, how much would they have to pay?

With legions of baby-boomers nearing retirement age, law firms, like other business, will have to pass on to new owners, and the question of valuation will become critical.

All too often, the fact is that law firms are worth nothing or not much. The reason is that lawyers spend their lifetime working on legal issues for clients, and there is no doubt that their work is valuable, but they neglegt the task of building value within the organisation itself. The firm is too often just the place where lawyers perform their business, and not an organisation where value is being built and accumulated.

Behind the question of law firm valuation (how much is your firm worth), the real question is, “How can you transform your firm in an organisation with intrinsic value?”

Antoine Henry de Frahan

The Rise of Homo Legalus

Click to enlarge.

Lip-service on Pitching

A while ago, a colleague sent me a copy of an article that appeared in the Dutch magazine Mr. In the article several Dutch law firms comment on the ever more popular technique to use request for proposals (‘pitches’) to select law firms and how they deal with it.

Besides the somewhat mathematically puzzling conclusion that law firms in The Netherlands seem to win the large majority of the pitches they participate in, the article also contains some remarkable phrases: “Pitching forces you to listen very carefully to the needs of the client and look at yourself in the mirror.” And: “All the firms conduct a thorough evaluation of every pitch they participate in.” Or: “At the debriefing, negative experiences are shared with everyone.” And this one: “Everybody seems to agree that pitching is a fun and exciting process to which lawyers contribute with a lot of enthusiasm.”

I leave it up to the reader to decide whether the journalist lives on Mars or whether he was the victim of a tiny little bit of window-dressing. Anyway, my experience is that pitching is indeed on the rise but that most lawyers just hate it and that very few firms succeed in producing consistently high quality proposals. Many have even outsourced it entirely to the marketing departments.

The glooming reality is one of despairing marketing managers, working late, struggling to produce an urgent pitch that has sit on the desk of the lawyer for two weeks and for which they hardly received any input, leaving them with no other choice but to generate the next dreary, where-have-I-seen-this-one-before proposal. Yes, some of the firms have reached decent levels, mainly because they have top quality marketing people, fully supported by the partnership. But the average pitch is just below standards (as are, by the way, many requests for proposals and selection processes…).

Why is it that lawyers manage unique occasions to impress potential clients so poorly? There are lawyers, blessed with a loyal client portfolio, who just don’t find this sort of activity intellectually stimulating and who admit that they are not good at it. But they are a small minority. Two other maggot-like scoundrels principally gnaw at the quality of pitching: the system and testosterone.

It’s the system, stupid!

Today’s law firms are not made for pitching. Pitches generally arrive on the desk of the rainmakers who don’t really need them. Preparing pitches fall in the time management bag where similar items such as ‘appraisal interviews’, ‘transaction debriefings’, ‘giving feedback to associates’ and ‘spending time with my family’ are waiting for Godot. That bag is labelled ‘Important, but there is always something more urgent and more billable’. By the time pitches really get urgent, they become the marketing department’s problem.

If ‘the system’ is not really favouring ‘preparing pitches’, what to say about ‘evaluating and debriefing pitches’. Which lawyer wants to spend lawyer time, the only resource on earth scarcer than oil, to evaluate a thing of the past that was ill prepared in the first place? As long as non-billable remains ‘non-billable’ and not ‘investment time’ and as long as firms have not sorted out how to structure that investment time, evaluating pitches will remain lip-service.

“Law firms are temples of testosterone”

This quote of the century is not mine, unfortunately. It comes from Ben F. Johnson III, Alston & Bird's managing partner for a decade. In the article Humble Lawyers: The Key to Pleasing Clients,he points out that “lawyers who pride themselves how tough they are" are making a fatal mistake, preventing them to deliver service that is of the highest possible level.

I would take that reasoning one step further: testosterone-overdoses are not only detrimental to client service; they are one of the most important obstacles to excellence in general. And pitching in particular. Why? Because pitching is about winning and losing, the favourite playing field of testosterone.

In the testosterone universe:

• ‘Having to participate in pitching’ means: “my reputation and expertise are not enough to win the client.”

• ‘Having to participate in pitching for an existing client’ means: “I have messed up.”

• ‘Carefully preparing a pitch’ means again: “I am afraid my reputation and expertise are not enough to win the client.”

• ‘Asking other partners or the marketing department to help in preparing the pitch’ means: “I am not able to win business on my own”.

• ‘Thoroughly evaluating lost pitches’ means: “there might be good reason why I lost the pitch”.

• ‘Thoroughly evaluating successful pitches’ means: “this win comes unexpected.”

Finding the right strategy, tactics and tone in a pitch requires empathy, curiosity and healthy doses of modesty. The more a firm is ego-driven, the less performing it will be in generating great proposals. As long as the rainmakers don’t take it serious, no one will.

Morale

Pitching is not rocket-science. It is fairly easy to train pitching skills, it is not that complicated to set up a decent pitching process or to install best practices. But as so often, skills and processes mean nothing if the values and the culture of the firm are not aligned. Good firms train lawyers in pitching and support them with pitching processes. Great firms build environments that stimulate and motivate those skilled and well supported lawyers.

Barend Blondé

Saving Our Soul

It is so refreshing to hear that a successful business lawyer is still doing pro bono work. It's even more refreshing when he does it not because it's good for his reputation or his address book, but simply because the legitimate rights of people are jeopardised and he feels he can do something about that. I become overwhelmed when I discover that this is a standard among the partners of this lawyer's firm, although they will not trumpet in on their website. As a partner says, "If I couldn't take at least one pro bono case every month, I would stop this job." That does not prevent them from being first class business lawyers advising board of directors on top legal issues.

I am fully supportive of the efforts to manage firms and make them successful and profitable. Considering a law firm as a business is a useful and relevant proposition. I am even convinced that most laywers should invest more time and energy in managing their practice and looking at it from an entrepreneurial viewpoint. But there is also another dimension, another level, in the practice of law. Lawyers are not just in a business, there are in a profession. The idea of a profession is that you don't just serve yourself, you serve a noble idea, a general interest. Being a medical doctor is not just about getting patients. It is also about health and life. Being a lawyer is not just about getting lucrative assignments; it is also about justice. I know that this idea will look totally naïve to many individuals and firms who couldn't care less, but what would you say if your medical doctor would laugh when you tell him that medical practice is about health? In the current context, I find it very refreshing to meet lawyers and firms who still take the idea of justice seriously, and feel committed to this idea, even if it costs them a few billable hours. I salute these honourable men.

Antoine Henry de Frahan

How Much Can You Take?

Clients sometimes ask their advisors the question, "What value can you deliver to us?". This is of course a very relevant question. However, I increasingly feel that when it comes to "value creation", it takes two to tango. A consultant may be able to deliver a lot of value (in the form of management insights, market information, strategic recommendations, benchmarks, creative ideas, energy level, etc.), but this potential value will only be transformed into actual value for the client if and to the extent the client is able to accept and internalise the advisor's contribution. To the question, "What value can you deliver to us?", the right answer is often another question back to the client, "How much value are you able and willing to take from me?".

Let's take a practical example: A client is in the middle of reviewing his organisation's strategy and hires a consultant (me, actually) to challenge him, to give him new ideas and suggestions, to help him think in innovative ways, etc. To what extent, however, will the client be really listening? How open is he to ideas that are indeed challenging his beliefs and thinking patterns? If the client does not listen, does not ask questions, interrputs me as soon as I start talking, and disqualifies my ideas as soon as I express them... Was there a lot of value delivered? No, or hardly. Does it mean that I have no value to deliver? Neither.

Another typical example is change management. Clients hire consultants because they want to change something: their strategy, their organisation, their communication, their visibility, whatever. But at the same time they don't want to change. That's the typical double-bind message "Change me but don't change me" that all professionals with their hands in change management are certainly familiar with. "Change our strategy, but don't change our organisation"; "Improve our governance, but don't make anyone upset"; "Make our organisation more efficient, but don't impose anything to anyone"; "Let's change the way we do things, but let's keep the status quo"; "Challenge me, but don't say anything I don't agree with".

Does that sound familiar? How do you deal with this situation?

Antoine Henry de Frahan

Nothing Beats a Strong Business Case

Imagine you are asked by the partners in a multi-niche firm to help them with their strategy. Let’ say this is a medium-sized firm with four practice areas: real estate, intellectual property, social security, and professional liability disputes. The partners of the firm have the feeling that they are not truly “sharing a project” and would like some help to get one. More specifically, they ask you to come up with some brilliant ideas and awareness-enhancing approaches on vision, mission, shared values, and similar enlightening matters. They think that this mix of philosophy (mission, values, etc.) and psychology (how to better communicate in the partnership) is what they need to make their partnership truly unified. They are shopping around for the ultimate group dynamics guru and want to put you on their short list. How would you approach that?

Increasingly, my instinct is that talking about values, brand, vision, mission and other metaphysical matters can be very effective, but subject to one condition: there must be a strong underlying business case. It is pointless to advocate team spirit if there is no business case for team work. In the case of the firm with its four practice areas, I bet that the lack of cohesion among partners is not the result of a lack of interpersonal skills or other philosophical shortcoming. It is not a psychic problem, it is a strategy and market positioning problem: what is the added value on today’s market of a multi-niche firm with such unrelated practice areas? If there is no added-value in your structure, why should partners care about the governance of this structure? If there are no clear, win-win synergies among the practice groups, why on earth should they “share a common project”? You can’t build a strong firm without a strong strategy, that is a coherent and convincing answer to the questions, “In what business segment do we want to compete?”, and “Is our organisation (including our list of practice areas) in line with that vision?” A mid-size firm with practice areas in unrelated fields (different clients, different legal issues, different business environments, different pricing habits, different networks, different competitors, etc.) will not naturally produce synergy among partners, simply because there is no reason for them to work together: they are in different businesses. It's not a firm, it is a conglomerate. Team building efforts will be helpless. If you want to build a strong, cohesive partnership, don’t limit yourself to the psychic dimension of being partners. Make sure there is a strong, shared business strategy. Your shared values will not mean much if they are not built on a shared (and solid) business-proof strategy. A firm without a common strategy and a consistent market positioning will inevitably remain or evolve towards a mere cost-sharing structure (“association de frais”), and even the most inspiring leadership guru will not change that.

Antoine Henry de Frahan

Remember Aristotle

Aristotle used to say that human beings consist of three centres: the cognitive centre (head), the affective centre (heart), and the physical centre (body). Hinduism describes seven centres or chakras, and not just three, but to keep this blog simple, let’s stick with the 3-center structure.

Happy, effective, energetic individuals are those were the three centres are aligned: there is a synergy, an harmony, a consistency between what they think and believe (cognitive), what they feel, love and are enthusiastic about (affective), and what they do (physical). When there is such an alignment, in any area of your life, no obstacle can resist you. What works for individuals also works for partnerships or other teams: the firms that are ultimately successful are those where there partners share common ideas and a certain way to think, feel enthusiast and attached to the same values, and act in a consistent way.

Inversely, a lot of misery comes both for individuals and for partnerships from a mismatch between what we believe in and what we (have to) do or between what we do and what we love (I read recently in a poll that 87% of employees actually hate their job).

Another form of such mismatch comes from what I call the “heart by-pass”: you define, at the cognitive level, the perfect solution (well documented, logic, intellectually brilliant, etc.), and you expect that it will be automatically translated into action (physical level). But a bit disappointment awaits you: nothing happens. People (your clients, your partners, or even the associates in your firm or department) simply ignore the cognitively perfect recommendations. The reason is that you have by-passed the affective centre. Convincing the mind is one think, but energising the heart is another. Many perfect strategic plans fail, despite their perfection, because their authors wrongly assumed that the readers are cognitive-physical (being convinced intellectually will lead to action) while there are cognitive-affective-physical, or even sometimes just affective-physical.

If you do not have a plan to excite people, to raise enthusiasm, to include the heart factor in your slides, to ensure that people feel committed and eager, then even your most brilliant and intellectually superior strategic plan will not lead you very far. People must feel emotionally connected to the decisions they make. The art of leadership is to cultivate this emotional connection, this deep attachment to certain values and objectives. A perfect plan with no passion attached is useless.

Antoine Henry de Frahan

Linking Compliance and Legal Risk Management

Does compliance has anything to do with risk management?Do these two "à la mode" concepts interact in real-life legal practice? Here are some thoughts on the subject.

From a strategic viewpoint, compliance is about deciding in which areas your company has a vital interest in complying with applicable laws and regulations. This will of course be different for various business sectors, because areas of vital importance are not necessarily the same for companies in banking, pharma, food or air traffic. In itself, this is already a risk management exercise: "What would be the potential consequences of not complying" is a typical risk management question.

By the way, the idea of focusing compliance efforts on selected areas may seem dangerous, as if it suggested that in the non-vital areas, complying with laws and regulations does not matter. That's of course not the point. The point is that when you operate in a particular market, there are some areas where complying with existing rules is not just important, but of strategic, vital importance. These are the areas where failure to comply could have devastating consequences for the company. Of course, defining compliance priorities should not be understood as a "licence to kill" in all other areas. It just means that in a world where resources are limited, companies must choose priorities, and that works also for compliance.

So, assuming you have defined your compliance priority areas, what's the next step? Here comes risk management again. You need to engage in a risk management analysis, to figure out where are your main risks of non-compliance in this area. Of course, it is important to limit this exercise to the selected priority areas (engaging into a risk analysis of non-compliance with any and all applicable laws and regulations whatsoever would of course pure madness).

The purpose of the risk analysis is to identify the weak spots: the situations that are not too unlikely to happen and that would have a dramatic impact if fthey do. Once you have identified those weak spots, those "risks", you then have to find and carry out ways to mitigate them by reducing their likelihood or their impact if they materialise, or both.

There is of course much more to investigate about compliance and risk management, but that's it for this post: the only purpose was to highlight how compliance and risk management go hand in hand.

Antoine Henry de Frahan

Including Legal Risk Management in the Training Curriculum

Yet another example that risk management has become a hot issue for in-house counsel...

Antoine Henry de Frahan

Making Risk Management-Based Decisions

Although risk management sometimes sounds like a complex and fuzzy concept, in practice it comes down to a thinking and communicating in a structured, simple, and powerful way. Here is an interesting illustration of how to use practical tools - in this case, a very simple grid - chart - to make risk-management decisions. The video is about climate change, not about legal matters, but the same thinking process can be used to legal matters. Or not? What is your idea about such tools in legal matters?

Antoine Henry de Frahan

Bang! In-House Counsel Are Hitting the Roof

Meet Michael in the year 2004. A lawyer in his early forties, Michael is bright, energetic, and ambitious. He was just appointed general counsel of a big, international company. This is the job of his career, and he knows it. He wants to make a difference, and he sees big. He wants to transform the somehow discrete legal department into a strategic, proactive, highly visible department. He wants legal to become sexy, high-level, and entrepreneurial. What does he do to achieve his goal? He hires lawyers like himself: young, energetic, bright, and ambitious. And then, together with his team, he defines an inspiring mission statement, launches an innovative lawyers-specific management training program, conducts internal client satisfaction surveys to document growing client delight, entertains annual strategic retreats, and fights with HR to procure to his entire team company cars and other benefits.

Meet Michael in 2007. He has achieved his goal. The top brass in the company sees a true leader in him, and he now sits at the executive committee of the company. He as truly assembled a team of brilliant, enthusiastic, top quality lawyers, who provide truly valuable input. The legal department is highly regarded within the company, and at all levels, managers perceive in-house counsel as key business partners. Mission accomplished. Michael has succeeded.

Meet Michael in 2008. Michael is very worried. In just the first three months of the year, four of his “dream team” members have left the department. Two of them are still in the company, but one has become the manager of a new business unit, and the other has become the assistant of the business development director. The two others have left the company for general counsel positions in other, smaller companies. What’s went wrong? Nothing, actually. Michael did exactly what he had to do to build up a powerful legal department. The only problem is that in a profession where people are used to the “up or out” philosophy”, when there is no way up, the only option is to move out. Hire high potentials, put them in an exciting position, but sooner than later they will come with the question: What's next? That's the question Michael didn't really have an answer to. After three of four years in a position, ambitious professionals will start thinking a bit less about their job and a bit more about their career. If Michael wants to build a strong department for the long term, he has to think about developing a career path, or be ready to see his team go.

Career path in the legal department, hum...hum... That’s not too difficult if the company is growing, starting new business units, expanding internationally, or if the senior positions are occupied by baby boomers in their late fifties on the verge of retirement. But it is quite a challenge if the company has already reached its maturity size and does not create new opportunities, and the individuals in the senior positions do not plan to retire before another decade. If that’s the case, Michael will have to be imaginative to carve out career options that are sufficiently attractive to retain his high potentials for the long term (and horizontal mobility may have more to offer than the vertical one).

Alternatively, Michael will have to get used to the idea of periodically losing his “best and brightest”. Fortunately, turnover may not be such a bad thing after all. Of course, Michael will loose experienced professionals, familiar with the business of the company and the internal clients, but look at the bright side:

- Lawyers who leave the legal department to become business managers will most probably keep good ties with legal. They will become “good clients”;

- The legal department may earn a solid reputation as an incubator for high-potential individuals who then take managerial positions in the company. That may be a very powerful argument to attract candidates in the legal department, who know that after a few years, they may have the opportunity to pursue their career in a business function if they so wish.

- Lawyers on their way out also make room available. Especially if they where holding a senior position, their departure constitutes an opportunity for other, younger, ambitious lawyers in the department to move up… and stay longer in the legal department.

And what about you? What would be your recommendation to Michael to deal with his retention challenge?

Antoine Henry de Frahan

Turning the Legal Department into a Profit Center

A few days after publishing an article on the importance for in-house departments to turn their back from the "cost center mindest" and to embrace a value creation, I was thrilled to find a impressive illustration of the same idea: The International Herald Tribune of 3 October 2007 explains how Dupont's legal department is turning itself into a profit center. Read the IHT article.

Antoine Henry de Frahan