How to manage outside counsel

In today's fast-paced and ever-evolving legal landscape it’s important to understand how to utilise outside counsel in your business.

Read on for our 7 top tips for managing outside counsel.

What are outside counsel?

Outside counsel refers to the external lawyers that a business hires to represent them. This usually entails paying a holding/standard fee plus billable hours. Outside counsel are useful for businesses of varying sizes, either to support an in-house team or in place of one. Regardless of size, businesses all face legal, compliance and regulatory challenges that require legal advice.

Why do in-house counsel need outside counsel?

While every company can benefit from having a lawyer on the team, not every business needs to invest in a full time in-house lawyer. This is where outside counsel can come in handy. Equally, for smaller companies or startups there may only be one generalist lawyer. In this case, outside counsel can be useful if you need a team with specialist skills to work on matters such as litigation.

Top tips for managing outside counsel

Outside counsel plays a key role in helping businesses and individuals by providing valuable legal advice, representation and support when needed.

This can allow businesses to access legal expertise tailored to their specific requirements without the need to maintain a full-time legal department, or deep specialism in areas you might only need from time to time. But how do you manage outside counsel? Keep reading for 7 of our top tips.

1. Choose the right Counsel

Select outside counsel with expertise in the specific area of law relevant to your case or legal needs. Check their track record, reputation and references to ensure they are a good fit for your requirements.

Start by looking for recommendations within the legal community. This could be through your own network or groups like Juro’s community, a collaboration of 1000+ in-house lawyers at scaling companies. Alternatively, you could search on legal directories such as Chambers or The Legal 500.

You have to work with outside counsel to ensure that the business is number one. So this means choosing to work with an outside counsel you feel is the right fit for your business. Look for expertise and experience working with businesses akin to yours.

2. Create clear guidelines for outside counsel

Creating guidelines for outside counsel is key to achieving strong results and maintaining a stable working relationship. Guidelines act as a tool for managing expectations for each vendor, which allows both parties to focus on providing value to the business.

Outside counsel guidelines usually cover a few key areas, including:

Billing hygiene: this means keeping on top of when and how to bill outside counsel with budgets in mind.
What gets charged: guidelines should clearly outline what work fee earnings should charge for and what is part of the standard package.
Resourcing: as some fee earners have more seniority and experience, they’ll often charge more for ‘billable’ tasks. Knowing in advance which tasks will require seniority is important.
Commercial terms: this ensures that you have agreed rates and budgets. Keeping limits on when and how much rates can increase will ensure nobody is surprised by the bill at the end.

Many of these guidelines apply directly to billing arrangements, as this is often the most complex part of the relationship between in-house and outside counsel. Equally, these are guidelines, not rules, because it’s not always practical to create billing rules that apply to every legal matter.

For example, when it comes to conducting legal research the guideline could read: ‘Outside counsel may only change for original research when approved by the General Counsel.’ This means that standard legal research isn’t chargeable but billing for research into more niche areas of law may be approved by the GC.

Remember, guidelines allow you to clearly communicate what you need from outside counsel in terms of strategy, timelines and budget.

3. Prioritize

This may sound simple, but determining which matters can be taken in-house and which should go to outside counsel isn’t always easy. This process can be made simpler by splitting your priorities into two categories: importance and impact.

This prioritization will allow you to allocate resources effectively and address critical legal needs. For example, litigation matters may take precedence over routine contract reviews.

You could also create a prioritisation framework considering factors such as legal risk, regulatory compliance, financial implications and strategic alignment. This will allow you to assign a priority level to each legal matter based on this framework.

Prioritising legal matters effectively with outside counsel is an ever-changing process that requires ongoing communication, collaboration and adaptation. Aligning your businesses legal priorities with your strategic objectives makes sure that resources are directed toward the most critical legal matters.

4. Track results

In order to assess the efficiency of current systems and processes, you need to track results. By tracking results you can track not only the effectiveness of outside counsel but the improvements that could be made. Are you achieving the desired outcome for your legal matter? Is outside counsel delivering value for the fee you are paying?

Asking questions like these helps you make an informed decision about whether you should continue working with a particular outside counsel.

Regularly reviewing results also facilitates a collaborative approach to continuous improvement. Each side can provide feedback and work together to refine legal strategies and tactics.

We recommend taking these steps to effectively track results:

establish Key Performance Indicators; (KPIs)
regular reporting;
feedback sessions;
budget vs actual analysis; and
client surveys.

Tracking results means you can inform decision-making and work better with outside counsel.

5. Create an external legal spend tracker

An external legal spend tracker is a space where legal teams can document and track their outgoing costs - that is, anything that isn’t completed in-house and outsourced to agencies or law firms.

Find out exactly how to track external legal spend in this blog post by Rebecca McKenzie, Head of Legal at Codat

A spend tracker helps the legal team to visualise their costs over time, and track performance against legal department KPIs. This is an essential part of managing not just outside counsel but enabling legal to best support the business.

As sole counsel, I can’t do everything, and being able to justify the costs to the COO is really useful
- Rebecca McKenzie, Head of Legal, Codat

6. Leverage technology

Use technology to streamline the process. From collaboration tools and secure document management systems to communication methods and document sharing, technology can enhance efficiency.

An ideal software solution will connect company lawyers with business colleagues in procurement, sales, HR, and beyond to support a collaborative approach to managing risk and accomplishing business goals. For example, the right matter management software could do some of the heavy lifting for you.

One way technology can help manage outside counsel is through contract automation. We weren’t not going to mention us…Juro is an example of an AI empowered contract management platform that empowers legal and business teams to collaborate on contracts in a single unified workspace.

For a more in-depth guide to legal software, check out this deep-dive into legal software.

7. Foster a collaborative relationship

Build a collaborative working relationship with your outside counsel. Sharing information and insights about your business or organisation will help them better understand your needs.

Making this relationship more collaborative will prevent you feeling like a billable matter and like you’re working alongside outside counsel. Working well together can lead to better outcomes, reduced costs and increased efficiency.

To ensure you work together, you should consider some of the following:

View the relationship as a long-term partnership
Attend networking events with outside counsel
Continuously review expectations
Define roles and responsibilities

Working with outside counsel requires ongoing effort and communication. By maintaining a positive and transparent working relationship, you can maximise the value of your external legal partnerships.