Wednesday, May 13, 2015

Some Clients and Industries Are "Better" to Represent than Others

A hushed and taboo topic of conversation that lawyers rarely write much about is what clients and industries are "better" to represent than others.

Their reticence is largely because outside counsel are perennially fearful of offending any potential clients.  So, they would rather pretend that "all clients and industries are equal," than openly discuss the vagaries of representing clients that come from very different industries.

But the reality is that representing a small startup client in the media industry will be a totally different experience for the lawyer than counseling and representing an established banking industry client, or a large multinational pharmaceutical company, even if the legal subject matter of the representation is similar. 

Each industry and client will have its own pros and cons for the outside counsel, and clients will often have very different expectations of their outside counsel.  Here are a few examples:

Large multinational corporations are highly structured and regulated, and have become extremely demanding of their outside vendors.

Over the last decade, most multinational corporations have come to view outside counsel services in the same category as any commodity vendor.  This type of treatment often leaves lawyers feeling like their services are being viewed about as uniquely as paper products.

Further, in-house lawyers working for these companies are usually very sophisticated and will pressure their outside counsel to offer extremely unfavorable deals.

Many law firms that regularly represent and counsel Wal-Mart complain that they are required to offer "most favored nation" status to Wal-Mart for their hourly billing rates.

What that demand means, in layman's terms, is that if a law firm offers a special discount to any other client, it is required to offer the same (or better) discount to Wal-Mart.

Consequently, given Wal-Mart's strict "Outside Counsel Guidelines," many lawyers will simply refuse to even consider representing a behemoth, regardless of the volume of work that could be involved.  If a lawyer's standard billable rate is $800 an hour, and she must offer a discount down to $475 an hour to Wal-Mart, she may very well end up working for peanuts (relatively speaking, of course).

The reality is that Wal-Mart will have no problem finding another law firm to underbid the legal work, leaving the outside counsel with zero leverage.

Industries can matter more than a client's size.  For example, companies in the agriculture and mining industries are notoriously difficult to work for, for a variety of cultural reasons.  Agriculture and mining jobs often have lower salaries and workers in these industries are often very unhappy.

Such unhappiness about their career prospects generally can rub off on the outside counsel, who may be seen as charging too much for her time.

Similarly, representing non-profit enterprises and software companies is also notoriously difficult, given the stringent demands on those particular workforces.

According to Forbes, media, entertainment and retail fashion companies tie for the third unhappiest industry to work in.  These industries often pay their employees with glitz and glamor rather than cash, and expect their outside counsel to similarly discount their own financial expectations, in exchange for prestige.

Small companies and startups are also a mixed bag.  Some outside counsel report that some of their most enjoyable work has been advising smaller companies and startups during their nascent phases.

This satisfaction is in part because these companies often possess wide latitude in making decisions and are not hampered by the extremely top-heavy management styles of large multinational corporations.  A lawyer's advice may end up shaping significant business decisions that the client makes.

The obvious downside is that these companies are often so legally unsophisticated that they "need their hand held" by their outside counsel, but may not be in a position to pay the lawyer enough money to remotely justify micromanagement of their day to day legal affairs.  Whether a client has an in-house counsel will make a huge difference for the outside counsel.

Individuals are sometimes the most interesting to represent, but perhaps may be the most rewarding and challenging of all.  When a lawyer represents a client so small that it may consist of a single individual or family, that relationship will often become very close.  

A lawyer may become a trusted advisor affecting all parts of that individual client's life.  Some lawyers report becoming so close to their individual client's lives, that they become like family.  Of course, such intimacy can lead to obvious tensions, too.

Whether a client is foreign or domestic can make a huge practical and cultural difference, too.  For example, lawyers have reported that representing Japanese electronics companies will offer an extremely different experience than representing a midwestern American auto maker.

Similarly, representing a German cellular phone company will be as different as night and day from representing a North Carolina based tobacco company.  These clients' unique cultures and expectations will make for very different experiences for their outside counsel.

The reality is that clients are people, too.  Each client has its own unique personalities and traits.  Clients also function in industries that are often absurdly demanding and, in some cases, dysfunctional due to no fault of the client.

Over the course of her career, the aspiring outside counsel would be well advised to be careful to choose her clients wisely, as the internal and external pressures that the client faces will often affect her own lifestyle, as well.

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