From relying on chemistry to counting on reputation being representative, Zito Director of Legal Affairs and General Services Tamara Mohoric Selak talks about how she picks her external “firefighters” and how she nurtures long-term collaborations with them.
CEELM: What types of legal work does your team tend to externalize?
Selak: I often make a joke about my work: I enjoy answering the question of “What is actually your job?” by saying “I am a firefighter.” Legal departments are usually the contact when something goes wrong and a fire has already started. As an in-house lawyer, your work is extended to almost all issues of the company and you are the key contact person in almost every project.
Most of the time you have to act quickly, so I usually externalize legal questions on which our team does not have enough expertise and we need a solid and quick fix to our fire.
CEELM: Is appealing to external counsel quicker than addressing it internally?
Selak: Yes, when we don’t have the expertise or knowledge in-house – definitely. When an internal advisor gets an issue that they are not acquainted with, it takes a lot of time to go through all the research to get the needed answer. As we’re firefighters, many things do come up and we can’t be a one-man solution to absolutely everything – that’s simply not possible for a generalist in-house counsel. In theory, external lawyers have the opportunity to specialize and should be equipped to address specific issues that come up.
CEELM: What are the most important criteria you look at when picking which firm/lawyer you’ll be working with on a project?
Selak: First and most important to me is the chemistry in our communication. If there is good chemistry, I know my team will be able to work with that external lawyer successfully.
At the same time, I prefer working with firms that have larger teams because of the similar assumption that no one person can be an expert in everything. If they are a full-service firm, they should be able to cater to the full range of issues we might need to handle.
CEELM: On the flip side, what are the main things you don’t really care about when you receive a proposal from a firm?
Selak: In a recent search for a new external law firm to work with I was often asked if I prefer to receive legal advice prepared directly by a senior lawyer, their Partner, or from a junior lawyer. This is the one thing I do not really care about. When I order legal work, I expect it to be reliable and professional regardless of its source. As I result, I do not actually care who prepares it.
CEELM: We’d assume they ask because that influences the end bill though…
Selak: Of course, but Slovenia is a small country where reputation really matters. When I get any advice, I need to know I can commit to it and rely on it. I don’t care if it’s a lawyer who has decades of experience or a junior who does the drafting – the same standard applies. And firms know that and how much reputation matters so they will make sure it is serviceable advice anyway. Ultimately, by taking this position, you do get solid advice but it is also a way to get a lower cost at the end of the day.
CEELM: What best practices have you developed over time in instructing a law firm for a new mandate?
Selak: My instructions to external law firms are actually really simple. When we have a new case, I expect to receive suggestions and explanations for various options, eventually getting the ultimate advice on which option is best. My own management expects to receive various options as well, which we then discuss and make a decision on how to work on a case. If a law firm delivers this, they are on a good path to getting subsequent mandates from me.
CEELM: And what steps do you take to ensure the firm has a strong grasp of the case you are dealing with? Or do you expect them to do their own research?
Selak: I usually provide all the information I think they might need to know in an email and I stress that I need several options. It might be stemming from the luxury of working with strong firms only in the past but lawyers tend to be more than able to take it from there and do the legwork necessary to cover our needs. Ultimately, lawyers tend to want recurring business and know that if they fail to deliver, we’ll simply stop working with them in the future. I think that as long as you make sure to convey clearly what your needs are off the bat and you have the right incentives of a promised long-term collaboration in place you are in good hands from there.
CEELM: What is your preferred billing structure when it comes to external counsel? And what steps do you take throughout the mandate to limit budgets going over?
Selak: While working with external lawyers and law firms for more than 10 years, I find that the most suitable billing option is working under a blended hourly rate model. The best way to limit budget is to make it clear from the start and before giving a mandate what you expect to see (or not) in the billing process. For example, in a long-term cooperation, I do not expect every short e-mail and short call to be billed. I always make this clear and confirm this kind of cooperation is something our external counsels understand and are comfortable with. I’m not unreasonable of course – my assumption is always that I will be billed for one additional hour here and there but I simply don’t want to see a bill landing on my desk for every single email. I’ve had that happen with some firms in the past but those are the firms I no longer work with.
CEELM: Why do you believe a blended hourly rate is the best approach?
Selak: First, it allows me to comfortably explain what I mentioned earlier – I don’t care about the seniority of who is involved in the advice as long as it is solid. And firms can assign matters internally as they deem fit and it makes sense for them as long as that metric is achieved.
Second, in the process of dealing with a new firm, I get to tell them that we’ll use an hourly rate but I want a good rate. As an in-house counsel, I know roughly how many hours I’ll need and a blended hourly rate then feels like a clean way to negotiate. If a firm wants to work with you in the long term, you usually receive a discount.
CEELM: Do you internalize input from external counsel in some form of a knowledge bank? If so, how?
Selak: Yes of course. Sometimes, I personally need reassurance if my understanding of a legal matter is correct and therefore ask an external counsel for further advice. Subsequently, the external advice received is used as part of our internal knowledge bank. For example, in our weekly legal team Jour Fixes meetings, we discuss external legal advice received so that everybody in the team gets familiar with it and maybe gets a new perspective in handling those sorts of legal issues going forward.
