- August 31, 2014
- Posted by: Treadstone Management Partners
- Category: Risk Management
Lawyers and attorneys provide the interface between many types of businesses and the government. Regulation in the United States, as well as many other countries, is of utmost importance to industries such as management consulting. Consultants interface with other industries and the government by hiring lawyers and attorneys through one of two methods: in-house counsel or outsourcing counsel. The most obvious reason management consultants need to consult with lawyers is to conduct any and all due diligence and to ensure all actions taken by the company comply with all laws and regulations set forth by the government. However, management consultants also interface with lawyers because they support the management of the company as well as expand the company’s network so that in the event that outside counsel is necessary, the management consultants appropriately outsource counsel.
Every decision and recommendation that consultants make with regards to their clients must be compliant with the law. Business in the United States is highly regulated in the sense that almost all decisions involve contracts that are legally enforceable. Hiring in-house counsel and consulting with lawyers and attorneys allows management consultants to exercise caution in their decision-making process and ensures they don’t break any laws. According to Jonathan A. Segal, a partner of Duane Morris, LLP, a large international law firm, “most organizations do not orient employees…on the role of in-house counsel, when they should consult with them and how to interact with them when they do. As a result, senior managers may operate with erroneous assumptions that later create ethical or legal problems, or both.” For example, if a management consultant simply decides that it is most efficient for a company to lay off 10% of the workforce in the company, interfacing with the law and realizing that management cannot simply do as they wish because it is efficient is an important realization that many senior managers do not understand. While this example may be an exaggeration, there are ample circumstances in representation, privileged communication, waiver of privilege, confidentiality, documentation, and abuse of privilege, among others, in which contracts and other documents legally bind management from making unlawful and unethical decisions.
In-house counsel provides support to the management of the company by enhancing teamwork. Efficient teams, whether that is in an educational institution or a manufacturing facility, are forged through a sense of trust. As a result, it is important for both management consultants and lawyers to understand one another in an effort to create better efficiencies and more effective risk management. One of the greatest advantages of in-house counsel to management consultants is that they work first-hand with the consulting group and thus have intimate knowledge of the business. According to Tracey Salmon-Smith, counsel for a large law firm on the east coast, “While a particular approach or strategy may make sense from a ‘litigation’ point of view, such course of action may not comport with the end-goal of the ‘business.’” The learning curve created through familiar situations allows management consultants and lawyers to work together effectively. Counsel needs to understand the goals of the management consultants so that they are able to audit their decisions, but management consultants also need to be cognizant of the law and understand what their in-house counsel is capable of advising.
However, at times it is necessary to outsource legal counsel because the in-house counsel’s knowledge and expertise is industry-specific. Despite the fact that in-house counsel may not be knowledgeable of the subject matter, the in-house counsel has a large network that the management consultants can use to obtain the best services for the best price. From a financial perspective, there is a large reduction in the amount of billable hours for the company because the in-house counsel will be able to resolve situations which occur often. If expertise is needed about a specific subject, the in-house counsel has a network of contacts in the industry and knows exactly when it is necessary to outsource counsel, allowing the management team to reach out for specialized help. The in-house counsel will not only provide these contacts, but also vet and negotiate a greatly reduced price. But nevertheless, in-house counsel will only know to outsource counsel if they understand the management consulting industry.
In any situation in which people are working together, it is of utmost importance that each person understands the others’ backgrounds and skills. It seems obvious that since lawyers and management consultants work together, each needs to know the others’ business in order to understand how they can supplement the each other’s work. However, the intersection between lawyers and management consultants stretches beyond lawful representation and allows management consultants to reduce billable hours, increase efficiency, foster a greater sense of teamwork, and create more effective risk management policies.
Segal, Jonathan A. “Educating Executives on the Role of In-House Counsel.” Executive Counsel (2010): n. pag. Duane Morris LLP, June-July 2010. Web. 26 May 2014.
Salmon-Smith, Tracey. “Do Unto Others …. Successfully Navigating the In-House Counsel/Outside Counsel Relationship.” (2013): n. pag. American Bar Association, 12 Feb. 2013. Web. 26 May 2014.
Giampolo, Angela. “Does My Company Need In-House Counsel?” (2011): n. pag. Giampolo Law Group, 9 Mar. 2011. Web. 26 May 2014.