The Changing Relationship Between Internal And External Legal Counsel

The relationship between General Counsel and their external advisors is key to the success of any legal project whether it be contentious or non-contentious work.

There needs to be a mutual professional respect and understanding from both sides and an understanding of exactly what role each is to play in the project at hand. There is no one size-fits-all in this regard. Sometimes the in-house counsel wants the external lawyer to take the lead and run with a matter, sometimes the external lawyer is more of an advisor fulfilling a supportive 'second chair' role - a variety of factors are at play and clarity around what the relationship will be is crucial to success.

Winmark's Looking Glass Report 2018 produced in partnership with Clyde & Co considered, among other things, the internal/external relationship in the context of the changing role of the in-house General Counsel, focusing on what, from a GC's perspective, is driving change in the role of external counsel.

Perhaps unsurprisingly, cost pressure was the main driver of change. 82% of the 100 in-house legal leaders surveyed identified costs and the main driver for the change in the internal-external relationship. It would be overly-simplistic to interpret this as meaning that in-house counsel must spend less on external lawyers. More, it is a question of efficiency. Is there capacity and expertise for the work to be done in-house instead? Can a better way of working with the external lawyers produce a more efficient process? This may be achieved through exploring different fee structures, perhaps working closely with one external provider in order for them to better understand the business or some other mechanism that creates efficiency, and most likely also reduces cost.

The Winmark report identified four key relationship types between internal and external counsel:

The insurance policy - most relevant for strategic, high-risk issues where GCs want to minimise the chances of anything going wrong...