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  When Your Partner Leaves

Author: Richard Stock - Lexpert (May 2014 at p. 66)

PARTNER MOBILITY is completely normal in the current legal market. Firms gain and lose partners every year. But when a company's relationship partner moves to another firm, general counsel rarely receive advance notice. And then there are those rare tsunami events when a whole firm merges with another or dissolves. (The dissolution of Heenan Blaikie LLP earlier this year is a case in point.)

Such events are undoubtedly stressful for the partners and associates involved. But they also represent a period of uncertainty and instability for general counsel and members of the legal department that can last for weeks or months. As the relationship partner adapts to a new work environment, there are bound to be distractions to work flows and to service levels, regardless of assurances for a smooth transition.

General counsel should also take note if it becomes apparent that the external counsel team is breaking up and will not make it to the new firm intact. Partners usually work with one or two associates, sometimes with a paralegal and support staff to manage their practices. If the team is breaking up, the partner will need to secure essential resources from the host firm, and then quickly sort out the working relationships with a new legal team. This will take a few weeks. In the meantime, client expectations need to be addressed and service levels exceeded.

Clients should be fair in ensuring that their work in progress is billed out by the legacy firm, and that all accounts payable are paid to the original firm as well. In addition, clients should not become embroiled in economic battles between law firms and their partners. For every bit of change - not to say turmoil - in a law firm or in a partner's practice, there are opportunities for the legal department as a client.

The first is to secure a detailed, in-person briefing about the expertise and experience of the new law firm. Bench strength conversations should extend beyond the availability of enough associates and paralegals for a given specialty to the full spectrum of legal specialties and jurisdictional coverage that might be needed by the company. The GC can help the new firm to prepare for its presentation by suggesting the type, amount, frequency and jurisdictions for the legal services it might require over the next 12 to 36 months.

Some partners make lateral moves to other firms. A very small number trade up to higher-rated and higher-priced firms. In the case of the Heenan Blaikie dissolution, blocks of partners moved to full-service national and regional firms, others set up boutique firms of their own, and still others rode off into the sunset. Transitions like this can be especially difficult on associates who are entirely dependent on partners for their work each week.

It is rare for a company to refer 100 per cent of its legal work to a single law firm. Competition law, litigation and labour/ employment law are regularly referred to specialty firms. Partner mobility and law firm dissolutions are important opportunities to consider consolidation of work with fewer firms. GCs should not miss the chance to invite firms to compete for their book of business or even for major files.

There is often a hesitation to change horses midway through a significant file - be it a transaction, labour negotiations or litigation. In cases where the lead partner is on the move, ask for a detailed plan and budget by phase and task for the remainder of the matter. Even in normal times, less than 20 per cent of complex legal work is supported by detailed plans and budgets. GCs are remiss in this respect. But with the data in hand, it becomes possible to prepare explicit terms of engagement that cover planned outcomes, service levels and fees.

Lawyers in transition desperately want to deliver their legacy clients to their new firm. Doing so while expanding on historical volumes for the new firm is an added bonus. In exchange for such a commitment, general counsel should secure better financial terms. Law departments do not change their work referral patterns for an additional 5-per-cent discount. However, competence being equal, an effective rate that is 15 per cent less than the historical rate can be persuasive.

Every GC wants to save money. Many boutique firms carry lower overhead and offer better rates. The same can be said of regional firms. GCs should make use of changing times to secure more progressive alternative fee arrangements with primary counsel. When your partner leaves, insist on new arrangements for the future.

   
 
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