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Selection, Management, and Evaluation of an External Consultant

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Nowadays, in many countries, the demand for legal outsourcing is increasing in response to the rapid development of certain business activities, and the necessity to hire an external consultant can arise in a company of any scale, status, and activity, whether an in-house lawyer is present or not.

Often, mandating an external consultant enables a company to obtain additional work resources quickly, provide legal support for unusual tasks and projects, and to obtain a look “from the outside” at its internal processes.

Throughout my career, I have been both an in-house lawyer and an external consultant for many companies, and as a result I can say that the parties are not always satisfied with the result of work performed by an external consultant on a project or task for which he/she has been retained, and the relationship does not always result in further efficient cooperation.

In my practice, I have seen relationships with outside lawyers turn so negative that even before the end of formal cooperation we all knew that we would never return to him again.

Choosing an external consultant (and this may be an independent consultant, attorney, lawyer, or a law firm with a team of lawyers and attorneys) is a very important decision. In my opinion, the right choice of an external consultant is 50% of the success of further fruitful cooperation.

So, when choosing an external consultant, we can use the following criteria:

1. The Purpose of Attracting an External Consultant

In order not to make a mistake in choosing an external consultant and to instruct him/her correctly, the company must clearly define the goal for which the external resource is attracted, what the expected result of the cooperation is, and what the key conditions that must be observed are (for example, applicable mandatory deadlines, and so on).

2. External Consultant’s Reputation

The external consultant’s reputation is of great importance not only in terms of the consultant’s professional competence, but also in terms of the risk of confidential information about the company’s internal processes leaking. For an external consultant, reputation is the main asset and, as a rule, outsourcing companies (including law firms) cherish their reputation and can’t afford to lose the client’s trust.

3. Availability of Recommendations for the External Consultant

When searching and selecting an external consultant, various sources can be used, including websites of legal companies and other legal portals and recommendations from partners or others who have had positive experiences with a certain external consultant.

I think that the best advertising for an external consultant, and in particular a lawyer, is the recommendation of another client, who was pleased with the services rendered to him. However, one should not blindly trust such recommendations, since the lawyer being considered may be a very good specialist in the field relevant to the person who recommended him/her to you (for example, in contract law) but may not have the necessary experience in the sphere of law relevant for you. Hence we have the following criterion.

4. Specialization of External Consultant

It is very important that the consultant or law firm has experience in the sphere in which you have a question or need for assistance. Also, if a law firm is recommended to you for a particular field of activity, make sure that the lawyers who will work with you on behalf of this law firm are – if not the same ones that worked with the source of the referral – at least of the same professional level.

The cost of services, in my opinion, is not fundamental when choosing an external consultant. The only point that should be taken into account when discussing the payment for a consultant’s work is the ability to pay in stages, based on the amount of work performed.

In order to be able to influence the progress of the external consultant’s work, at least two conditions must be met.

a. Consolidation of All Conditions of Cooperation in the Contract

Once you have made your choice of an external consultant, it is important to discuss, approve, and consolidate all the conditions and nuances of the cooperation.

The instrument of consolidation of all agreements, in this case, is a contract signed with an external consultant.

A detailed discussion of the conditions that are of fundamental importance for the company, a detailed description of the desired result, terms, and essential conditions of cooperation in the contract will provide an opportunity to control the process of implementing the task by the external consultant.

Every lawyer knows that in order to appeal any of the terms of a preliminary agreement, it is necessary to set out these agreements in detail in the final contract. The same rule can be applied to external consultants. It is necessary to discuss everything and include it in detail in the contract, as well as to provide responsibility for violation of the terms and conditions of the signed agreement in the future. It is necessary to do this even if the consultant comes strongly recommended or if the task for which the consultant is retained seems to be elementary.

b. Interaction of the External Consultant with a Company Representative

Often, if the company has a lawyer in-house, this lawyer interacts with the external consultant at all stages of cooperation. In the absence of an in-house lawyer, such a contact person may be for example, the project manager responsible for the tasks for which the external consultant had been retained. This interaction is extremely important, since only the internal representative of the company knows the company’s needs and can, in the process of implementing the project, identify any problems in the services rendered by the consultant.

Some of the aspects that need to be paid attention to in the process of cooperation with an external consultant, as well as in the evaluation of the external consultant’s performance, are:

  • the external consultant’s promptness (or lack thereof) in to the company’s requests or in achieving the objectives;
  • the external consultant’s attention to (or inattention to) details and nuances when rendering services;
  • the external consultant’s observance (or failure to observe) the confidentiality of client information;
  • any potential existence of conflicts of interest that may exist (for example, between the external consultant and other clients);
  • the external consultant’s regular communication (or failure to communicate regularly) about the progress of the task or project;
  • the appropriateness (or unjustified nature) of bills submitted by the external consultant for services rendered.

Of course, one of the key criteria for evaluating an external consultant is his/her achieving the result stipulated by the parties in the contract, compliance with the deadlines for the provision of services, and the absence of costs for the company not stipulated in the contract.

The right choice of an external consultant, the detailed consolidation of all the essential conditions for the company in the contract, correct task-setting for the external consultant, and regular interaction of the company representative with the external consultant at all stages will ensure fruitful and comfortable cooperation for both parties.

In our company’s activities, as well as in my personal practical legal experience, there are a number of examples of fruitful cooperation with external lawyers and law firms. And the observance of all the conditions that I described above has allowed us to cooperate successfully and long-term with external consultants, in particular on cross-border matters and in the support and structuring of investment rounds. 

This Article was originally published in Issue 4.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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