Role of Outside Counsel to a Corporation: An Appraisal (Part 1)

By Carol L. O’Riordan

I recently had the occasion to do some thinking about the role of a boutique law firm such as ours, which represents a wide variety of companies, large and small. We serve as outside counsel for many clients that have a well-established in-house capacity, and we work with their in-house lawyers. We also serve as outside general counsel for other clients that often need legal direction in daily activities but don’t have attorneys inside the organization itself. What distinguishes those two roles? How should those relationships be managed, and what should the client expect?

In this post, I will discuss the role that a firm like ours will normally play when the client has in-house lawyers of its own. In a later post, I will discuss what happens when we are the only counsel.

When we serve as outside counsel (for litigation and for counseling) to corporations with in-house counsel, our clients appreciate our focus and our subject matter expertise. We are brought in specifically for our detailed understanding of the underlying issues (government contracts, construction, securities and white-collar criminal defense, complex litigation), the interplay of specific legal authority (federal laws and regulations, industry-specific laws, international vs. domestic arbitration protocols, etc.), our knowledge of the forum (the rules of procedure and timing concerns in specific arenas and how those affect strategic decisions), and our ability to staff the effort with personnel with targeted and tested skills.

By comparison, in this situation the in-house lawyers usually have the responsibility of overseeing many different aspects of company operations, including litigation. They bring the institutional understanding and communicate the corporate client’s concerns and goals, while giving us the task of finding the best way to accomplish those goals in the areas we are most familiar with.

I am aware that, in some quarters, the role of outside counsel is viewed as creating an inherent conflict before litigation commences. Some believe that in-house counsel’s role is to keep a company out of litigation, and that perceived financial incentives will cause outside counsel to try to steer a company toward litigation. That has not been our experience. In fact, we often find ourselves in the position of “putting the brakes” on a client’s initial response, explaining to them the likely costs, benefits, and outcomes of a given course of action, be it a bid protest, a claim, or a lawsuit, so that the client (and in-house counsel) can make a more informed decision.

In litigation, we focus on the problem at hand and identify risks, timelines, and possible outcomes at various stages, as well as the needed level of effort to achieve those outcomes. We explain the options to in-house counsel and explore with in-house counsel the extent of available resources, the impact of identified risks, and the presence of other competing (often unrelated) demands placed on the company. The company, through in-house counsel, selects a strategy for us to pursue, and we then execute that strategy. This also works well in a non-litigation setting. For example, in-house counsel may discover a concern. Perhaps in-house counsel learns that the company’s planned sales to U.S. federal agencies will involve execution of federal forms that certify the origin of components used in the manufacture of the end product. In-house counsel recognizes that this will involve review of current internal policies and procedures, but is not sure what else is involved.

Our review allows us to advise in-house counsel (a) where, within the company, further investigation should be conducted; (b) what kinds of questions to ask; (c) how to document the answers (and to whom to report the responses within the company); and (d) how to ensure that, as the company processes evolve, the certifications that the company will make are accurate, complete, and will not adversely impact the company or its officers and directors.

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