In-House Counsel Describe Relations With Outside Firms During COVID-19 Pandemic

For outside law firms, the early lessons for delivering quality legal services to corporate clients during the COVID-19 pandemic are simple ones. Be present. Be nimble. Be helpful. Remote work is here to stay.

These were some of the lessons identified by general counsel based on their experience of working with outside law firms in 2020, after COVID-19 kicked in, as both law firms and clients across the country tackled novel legal issues and worked to steer their operations through uncharted waters.

While significant portions of the U.S. economy remain negatively impacted by the pandemic, many in the legal profession — litigators particularly — are busier than ever. According to an Oct. 6 analysis of 2020 COVID-19-related case filings by LexMachina, fallout from the pandemic accounted for 3,362 complaints filed in U.S. federal courts between Jan. 1-Aug.31, 2020.

The leading sources of COVID-19-related litigation were insurance disputes (692 cases), contracts (688 cases), and employment-related matters (209 cases). Much of this new litigation lands on the desk of corporate legal department leaders.

Speaking during the American Bar Association’s Business Law Section’s recently held “virtual annual meeting,” leaders of several large corporate legal departments shared their experience working with outside counsel during the pandemic.

Some Law Firms Were Slow to React

Douglas Barnard, senior vice president and general counsel at CF Industries Holdings Inc., in Deerfield, Ill., said that he was “pleasantly surprised” by how well his office and outside counsel have performed so far. Part of the reason for success was that a lot of the legal work was being performed remotely prior to the pandemic, he suggested.

Barnard noted that there were not many face-to-face meetings prior to the pandemic, so the new normal of pervasive Zoom calls has been a “wonderful development.”

Barnard’s positive experience was not universal. Gregory Gallopoulos, senior vice president and general counsel at General Dynamics Corp., in Reston, Va., said that his outside counsel exhibited a marked decline in both quality of work product and efficiency — as well as a loss of focus at the outset of the pandemic.

“Suddenly we started getting all this unreviewed work product, and some of it wasn’t very good,” he said. Gallopoulos added that his office made it a priority to address quality and efficiency shortcomings early in the pandemic, and that the situation has improved lately.

Michael Sharp, executive vice president and general counsel at Jefferies Financial Group Inc., New York, N.Y., said he agreed with Gallopoulos that law firms were not as nimble as they should have been during the early stages of the pandemic.

Sharp noted that, while all his company officials had business phones — with their office number — within days of government shutdowns, many outside lawyers did not.

COVID-19 Puts Downward Pressure on Legal Spending

The pandemic appears to have exerted strong downward pressure on pricing for law firm services. Two in-house counsel remarked that outside law firms must be prepared to address this new reality.

The message is not that corporate legal departments are going to look for different, cheaper outside firms. Instead, they said, law firms who have their business now must learn to take advantage of efficiencies afforded by technology and remote work environments.

According to Sharp, outside firms should learn to make better decisions about where to locate staff. The experience of working remotely during the pandemic proved that geographic location is not as important as it once was, he said.

“It doesn’t mean you’re not going to hire a certain firm, “ Sharp said. “It means that the law firm is going to have to respond. They don’t need to have a lawyer at Hudson Yards in New York, NY to practice law well.”

Sharp said that outside firms should consider hiring lawyers where it is less expensive to hire them and less expensive to pay office rents.

“This is going to be a chance for people to streamline a process that has been incredibly stodgy and inefficient,” he said.

Paul Liebens, regional general counsel for North America, ArcelorMittal USA in Chicago, described a business environment that is currently highly focused on cutting expenditures on outside legal counsel. He said that COVID-19’s impact on legal spending has been “huge,” and that executives in his company are expecting him to significantly reduce money spent on outside legal counsel.

Tech Savvy, Strong Relations Paid Dividends Early

In-house counsel noticed — and appreciated — those law firms that were already technologically adept going into the pandemic.

Maryanne Lavan, senior Vice President and general counsel, Lockheed Martin Corp., Bethesda, Md., described a mixed bag as her department transitioned from Skype calls to Zoom conferences.

“There were some law firms who were right with us,” she said. “But with others, we were teaching them.”

Lavan said that she most appreciated those law firms who understood the pressures her company was facing and were able to provide assistance, in real time, during the company’s early efforts to respond to state and local government mandates regarding the COVID-19 pandemic.

Marcy Cohen, general counsel and managing director at ING Financial Holdings Corp., New York, N.Y., remarked that her company also was heavily impacted by legal compliance obligations arising from COVID-19. She said she found value in law firm publications and webinars on COVID-19 topics.

Cohen said she also appreciated the opportunities afforded by technology to mix business with professional development and networking. For example, she said, the Zoom cocktail hours that have been held for women general counsel. It is important to discuss substantive, shared legal issues but also to continue to network during the pandemic and to make new connections with other attorneys, she said.

Barnard, a Zoom rookie when the pandemic began, remarked that videoconferencing had given him a new opportunity to shape the culture of his legal department. Videoconferencing allows more people to share their views, and to get to know each other better, he said.

Communication with outside law firms also benefited from videoconferencing. “I’m a big fan of continuing the use of videoconferencing instead of emails and conference calls going forward,” Barnard said.

Pandemic Brought Welcome Access to Top Partners

Louise Pentland, executive vice president and chief business affairs and legal officer at PayPal Holdings Inc., San Jose, Calif., said that she values outside law firms that are able to operate at the speed of a technology company.

“Our firms have risen to the occasion for the most part,” she said.

Pentland praised the ability of those outside law firms that were available to her in real time through technology. “That was one of the highlights, and it remains one of the highlights, for me, throughout this process,” she said.

Pentland added that she appreciated having access to otherwise hard-to-reach law firm partners during the pandemic. Because these in-demand lawyers are traveling less, they have more time to be available to clients, usually through remote technologies.

“The accessibility to some of these law firms’ partners has been really helpful for the velocity in which we’ve operated,” Pentland said.

Companies Notice When Law Firms Share Their Values

Pentland added that working with law firms that are, in a sense, an extension of PayPal in terms of technology and diversity, has paid dividends during the pandemic. Law firms that — prior to the pandemic — were already technologically adept and flexible in terms of remote work were very helpful to PayPal when the pandemic hit.

“I’m doubling down on that,” Pentland said. “I haven’t experienced some of the slowness and inability to react with the firms that we’ve used.”

Pentland predicted that the ability of lawyers to thrive while moving back and forth between an online and offline working environment will be a critical factor for success in the future.

Top-Line Takeaways

The adversity created by the COVID-19 pandemic revealed to the legal community a new, and perhaps better, way of delivering legal services. It brought into focus the qualities that corporate legal departments value in outside counsel. To a greater extent than ever, corporate law departments expect their outside litigators and advisors to:

• understand their business and share their urgency in solving business challenges;
• be at least as technologically adept as the companies they serve;
• make use of technology to efficiently produce high quality work;
• be available in real time if their business needs demand it; and
• pass along cost savings made possible by technology and remote working environments.

The varied experiences described by these corporate law department leaders are evidence that some firms are already meeting these new expectations while others are not.