For the lawyers and IP enthusiasts out there, I will be moderating a panel at an MIP seminar this Wednesday in Beijing on “Managing Outside Counsel.”

The two-day seminar, which runs tomorrow and Wednesday, is organized by Managing Intellectual Property magazine and is geared toward Chinese companies doing business overseas, hence the title “Protecting China’s Innovation Overseas”.¹ This is the holy grail for enterprising international lawyers, so I’m sure participation by foreign service providers hoping to score some business will be pretty good. Let’s hope that we also see a lot of local companies, and their lawyers, as well.

The majority of the two-day event will be on filing and enforcing IP overseas (e.g. in the United States and the EU). Most of the presentations and roundtables will be on related topics.

The panel I am moderating on Wednesday afternoon is a bit more tangential, although very important in my opinion. The topic is the relationship between in-house and outside counsel. The organizers entitled it “Managing Outside Counsel,” which should tell you something about the relationship from the outset.

The in-house counsel is the client’s lawyer, and is often the one who hires and supervises the outside counsel. The in-house guy is the one with the power, so I understand why the roundtable discussion is automatically geared for their consumption. Moreover, the entire seminar has been organized for an audience primarily of Chinese corporate in-house lawyers.

Having worked with quite a number of in-house lawyers over the years, I should point out that relationship management is definitely a two-way street, and that savvy outside counsel also do a whole lot of managing the relationship to ensure that things are running smoothly. To be blunt, a lot of outside counsel think that all they need to do is suck up to the in-house lawyer, get the work, and then things will run on auto-pilot. Big mistake.

In a competitive market, the amount of energy it takes by both sides to keep the relationship healthy is significant, and you can’t get this done with a lunch and a round of golf once every three months. Here are a few of the topics I have identified as important (these may not all be covered during the panel discussion):

1. Communications: surveys of clients routinely show that this is the number one source of complaints, so it is no surprise that it should be at the top of any list of issues important to the in-house/outside counsel relationship.

Unlike unsophisticated clients, though, in-house counsel are often very familiar with the law and applicable procedures. Outside counsel therefore do not always have to furnish in-house lawyers with the usual memoranda about law in that jurisdiction (unless requested). However, in-house counsel will need a very good record of what the outside counsel is doing, so keeping them “in the loop” along the way on transactional work is important. Usually this just means copying the right folks on emails, and often that’s enough. But you have to know the right time to send specific updates when you reach certain milestones as well, or if any additional decisions need to be made.

2. The human relationship: Cross-border work often entails doing big projects for people that you’ve never even met in person. But for large corporations with a lot of legal work for an outside counsel, having met someone in person (hopefully multiple times) is still very important. That’s one of the reasons why seminars and marketing events still manage to survive even after travel budgets have been slashed mercilessly over the past few years.

In many parts of the world, and definitely in China, you have a much better shot of being hired if you have that personal connection. Over here, the school classmate relationship is huge, particularly if you went to one of the better law schools in Beijing or Shanghai. That won’t help foreign lawyers, of course, but it does tell you something about hiring decisions. Additionally, personal recommendations are still as important as ever.

Let’s face it, despite all the web sites and blogs out there, in-house counsel are only human after all (some people would beg to differ, I realize) and tend not to hire people they don’t know. For outside counsel, initiating this relationship and then learning how to keep it healthy is a key part of maintaining their legal practice.

3. Navigating the corporation: One thing I learned early on is that it pays to learn as much as you can about a client’s internal structure, and I’m not just talking about their legal department. Outside counsel need to know who their “boss” is, who they should keep “in the loop,” and hopefully which department/office has more relative power than the other.

In doing IP enforcement work, for example, there is often an internal struggle for control at a company between the local office and the headquarters; for many companies, the latter is where most of the in-house IP lawyers reside. Although the local guys might have good information and ideas, it’s important to keep in mind that the IP lawyer back at HQ is often the one in charge of ultimately calling the shots.

4. Money: On Wednesday, we will definitely talk about this, but we will refer to “legal budgets.” I will be more blunt here. Along with communications, which is often related, money is a huge source of discord in the in-house/outside counsel relationship. No surprise there; we are talking about a business, after all. The in-house guy has a budget (which keeps getting cut every year), while the outside counsel is trying to squeeze as much as he can out of the client. Fun and frivolity ensue.

Very often the source of a money dispute has nothing at all to do with the amount, but the communications between the parties about the amount. In other words, to use some legal speak, there has to be a “meeting of the minds” on a budget, if possible, before the work is completed, otherwise there is a good chance that someone is going to feel screwed.

Going back to IP enforcement, I have seen horrific cases of outside counsel being given “the green light” to spend a lot of money, only to have the budget yanked out from under them when headquarters decides to change its mind. Agreement between the in-house lawyer and outside counsel is often not enough. As an outside counsel, I understand that I not only have to keep the in-house lawyer happy, I also need to understand that there are other, more senior folks, above that guy that are looking carefully at the legal budget and our results. Careful budgeting, aligned with realistic expectations, is the way to go. And then you have to successfully implement your plan of action, of course.

OK, that was a very hurried and incomplete look at this subject, which deserves a lot more attention in the future. I will try to pick up on the topic again in the future, but for folks in Beijing (or elsewhere in China) that are interested, check out the seminar tomorrow and Wednesday.
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1. If you are in China and have trouble accessing the MIP web site, send me an email. I have a PDF copy of the brochure.[↩]

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