1 External Counsel and In-house Counsel CIS Forum Panel Doran Doeh 26 June 2008

2 Who am I? Originally qualified as an English barrister, practiced in chambers for two years In-house at Burmah/BNOC/Britoil from 1975 to 1986 – drafted the legislative scheme to privatise BNOC Allen & Overy – set up their Moscow office and based here Denton Wilde Sapte since 1999 – back in Moscow from 2001

3 Why do companies need outside counsel? Generally Depends on size and capability of in-house department Extra capacity Specialist areas beyond in-house expertise Foreign law advice Second opinion Assurance to the board that have unbiased, carefully considered advice of both in-house and outside counsel Big deals Banks – formal opinions on transactions BUT a law firm opinion is not an insurance policy for the commercial risks in a transaction

4 Why do companies need in-house counsel? Legal management – Department Outside counsel Confidant of management, board Specialist needs Specialist contracts, transactions, industry conditions Specialist expertise, know-how Cost-saving Confidentiality

5 What motivates lawyers? Lawyers in general Interesting work/intellectual challenge Working out what the law is/how it applies Working on complex transactions/issues Working with creative/ambitious/demanding clients Prestige/recognition Supportive environment Money Sense of fulfillment

6 What motivates lawyers? Lawyers in private practice – all of the above + Independence Competitiveness Businessmen? Some Some of the time To some extent But - “I did not spend all those years learning my profession to become a marketing person”

7 What motivates lawyers? Lawyers in-house – all of the above + Being part of the team Understanding the company’s business – commercial issues Dealing with the whole transaction – from inception to completion and beyond Aspirations to management Seeing the broader picture

8 In-house styles Not all in-house lawyers have the same job Sole lawyer Small department Large department Huge multi-national

9 Law firms as businesses The big international law firm is a very recent phenomenon – before 1967 partnerships limited to 20 partners How small firms become big firms Problems of a sole practitioner Dealing with commercial issues Organic growth vs add-ons/mergers Low or no capitalisation – but banks will lend (in the West) Investment = hiring new lawyers (risk) Fixed costs (property, lawyers, staff), variable cash flow – look for efficiencies of scale, integration, specialisation Why international? Client globalisation

10 Common problems – private practice and in-house Managing lawyers is problematic Good lawyers are hard to find, develop and keep No readily comparable model – many parallels to show biz for individual lawyers, but the business of law is different Partnership v corporate structure Why recruitment and training are so important Departmentalisation Co-operation and self-interest Overseas offices

11 Relationship management Firms and corporate clients Existing clients v new clients Big clients v small clients Client care programmes, relationship partners and team Marketing Client satisfaction Quality of advice, quality of service – “Quality is what the client thinks it is” Selling what the client wants to buy

12 Relationship management Relationship A two-way process, requires effort on both sides Company’s lawyers can help the law firm understand the company’s objectives, motivations, internal processes, pressure points Make clear what what is done in-house, how the firm fits Firm’s support team – include partners and key assistants Anticipate needs

13 Relationship management Transaction management Division of labour between internal/external teams Agree on size, structure and quality of team Scope Timing of law firm involvement Ensure the external lawyers know who to report to, when and how

14 Relationship management Engendering loyalty and willingness to “go the extra mile” Urgent assignments at short notice Commercial conflicts Commitment of best resource Development of new/tailored resource