The seminar Replacing Tension With Trust: Better Aligning the Incentives of In-house Counsel and their Legal Service Providers brought together thought-leaders across the legal profession to explore the changing relationship between in-house counsel and their legal service providers, including both traditional law firms and the newer type of legal resource partners, such as Axiom and Practical Law Company.

The principal theme to emerge is that a relationship of trust between in-house and outside counsel is more important than ever, yet increasingly harder to build, as personal relationships and "face time" are giving way to the commoditization of certain types of legal work due to economic pressures and advancing technology. Equally clear, however, is that "where you sit is where you stand" on the issue of whether this commoditization is ultimately good for practicing lawyers and for the legal profession as a whole.

The panel discussion was marked by lively debate over whether traditional forms of law firm business development, and the notion of loyalty based on personal relationships, continue to make sense in today’s environment.

What is not in debate is that the traditional legal services paradigm is shifting, resulting in pressures being felt on both sides of the relationship between in-house counsel and their legal service providers.

Keynote speaker Trevor Faure of Ernst & Young Global and panelists Joseph Armbrust of Sidley Austin LLP, Andrew Felner, formerly of Citigroup Inc., James Lynch of Axiom and Bruce MacEwen of Adam Smith, Esq. each had their own take on how to build a greater degree of trust. The points they made at the seminar are summarized below.

The priority for lawyers today is to shape legal services so that they meet the overarching imperatives of a globalized economy and its demands for commoditization, compliance and the need to show a return on invested capital.

The traditional relationship between law firms and clients is a "zero-sum game," based to some extent on mutual distrust. In the zero-sum game, for one side to win, the other must lose. Law firms and clients can, however, create a "win-win," profitable partnership that encompasses the respective interests of both parties, based on an understanding that:

Together with their law firms, clients can use the broad Six Sigma principles to identify, measure and improve quality in the delivery of legal services, and to achieve more legal coverage with less headcount and less cost, and more compliance and client satisfaction.

It is important to treat in-house counsel as co-counsel, and to work together to establish clear guidelines regarding responsibilities and expectations. To build good relationships, especially now that business is primarily done over telephone and e-mail, attorneys should make an effort to meet clients face-to-face. At Sidley, we have encouraged our attorneys to get in front of clients in various ways, such as through secondments which allow our attorneys to provide legal services while learning the ins-and-outs of our clients' businesses and by giving formal presentations on significant legal developments that impact our clients.

At Citi, one way we improved our relationship with outside counsel was by implementing a law firm panel approach. By working regularly with five firms instead of one exclusively, we were able to have broad access to various specialties and talent while still retaining the benefit of working with firms that had institutional knowledge of our business. In addition, complete transparency regarding pricing, service expectations and the ongoing relationships enabled us to create an atmosphere of trust and an alignment of our business goals with those of our provider firms.

Legal service providers and their clients are not always speaking the same language. For every engagement, I ensure my team sits down at the outset with in-house counsel to understand their needs and how they want their service delivered. To enhance transparency, we set up performance metrics and revisit our fee arrangements every three months. Clear communication is key to aligning interests and avoiding inefficiencies such as overlawyering — a client shouldn't receive a lengthy memo when all they expected was an e-mail.

There is a gulf between law firm attorneys and in-house counsel when it comes to the price and value of legal services. In a Gerson Lehrman Group online survey conducted in April 2010, law firm partners and in-house counsel were asked whether outside counsel "always or usually understand the business issues." 92% of law firm partners said yes, but only 22% of in-house counsel agreed. This demonstrates a fundamental disconnect and must be resolved to maximize trust.