Who Should Be Doing What: The Most Effective Uses of In-House and Outside Counsel

AuthorDavid A. Steiger
Pages23-41
What Are the Capabilities of Your In-House Staf f?
“You can divide the world into two groups,” says Loring Knoblauch, retired
chief executive ofcer (CEO) of Underwriters’ Laboratories (UL), “the
GEs of the world who build in-house capabilities, and medium-sized (and
smaller) businesses that don’t have the necessary background or internal
resources to do that.” May Tan, formerly an in-house counsel with Hewlett-
Packard’s (HP’s) Asia Pacic ofce in Singapore, agrees. “HP doesn’t need
to use outside counsel that often,” she says. “They have a large in-house
legal staff.” Their drafting of contracts, transactional work, and intellec-
tual property issues are each dealt with by individual departments within
the in-house legal team.
A medium-sized company is likely to have a general counsel on staff,
and perhaps a small team of lawyers and nonlawyer staff supporting him
or her. You may be fortunate enough that at least someone on staff has
some cross-border experience. A smaller business, of course, may have no
permanent in-house legal staff at all, choosing instead to use trusted out-
side counsel as “quasi-general counsel” when the circumstances warrant it.
Whatever the case, it is the size and experience of your in-house staff that
23
Chapter 2
Who Should Be Doing What:
The Most Effective Uses of
In-House and Outside Counsel
Steiger_TransBorders_20140625_09-05_FinalPass.indd 23 6/26/14 9:20 AM
will guide you in the planning, diligence, negotiation, and implementation
of a cross-border transaction.
If you have in-house legal personnel, says Karen Klein, formerly general
counsel of popular travel websites Kayak.com and Orbitz.com, their job
consists primarily of two things: issue spotting for management and man-
aging outside counsel. Outside counsel’s job is to advise. Klein recommends
staging an initial “all-hands” meeting with the nonattorney business people
who will be involved in the transaction and then dividing up the work.
Tan strikes a similar note. In previous companies she worked for, such
as information technology (IT) rm Computer Sciences Corporation, they
farmed out work to outside counsel for things that they did not have experi-
ence to do. Still, when they engaged external counsel, they managed the kind
of advice they were seeking and paying for. Logically, if you do not have
dedicated in-house counsel to handle these tasks, trusted outside counsel
can function as the manager of, and liaison between, outside issue special-
ists and company management.
How much work should stay in-house? Donald Chenevert Jr., in-house
counsel for heavy equipment giant Caterpillar, recalls that in his experience,
a combination of in-house counsel and outside counsel is generally used.
There is no “one-size-ts-all” approach on how to divide up tasks, Chen-
evert says. In-house managers generally do initial internal research. Their
proposals go up through the ranks of management to upper-level manage-
ment. Then you might start to work with outside personnel.
If, for instance, you are interested in purchasing a local company to gain
access to a new market, you might ask outside consultants to identify poten-
tial target companies and narrow down the prospects to the desired prole.
Still, it is the in-house legal staff that typically begins to explore the legal,
strategic investment, and taxation issues. At a later stage, outside counsel
will work on issues such as condentiality and other specic agreements.
Chenevert nds that the internal business manager—not in-house
counsel—is typically responsible for accounting, return on investment
(ROI), and personnel issues. The lawyers provide the legal and conceptual
framework and help assemble the team that is responsible for collection
and assessment of data about the potential target. The end product of this
phase is a selective volume of information that allows you to go back to
CHAPTER 224
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