The inside track

By Joanna Goodman

Lawyer secondments to in-house legal teams are more popular than ever among UK firms. Firms, in-house legal teams and secondees all recognise the added value of these arrangements. As well as providing interim legal resources, secondments add significant value in terms of business development as they reinforce the partnership between law firms and their key clients. The challenge is to manage the process so that everyone reaps the rewards.

A win-win strategy
Handled properly, secondments represent a winning strategy for all stakeholders. For firms, they represent a useful marketing and business-development tool, enabling them to maintain deeper working relationships with major clients and gain an in-depth understanding of their working practices and culture. This helps them align their services more closely to clients’ requirements and develop new and improved products and services to meet specific needs. In addition to more tailored legal services, the client’s legal team benefits from timely support from a trusted advisor with an appropriate level of experience. The influx of external knowledge, expertise and enthusiasm can also invigorate the in-house team. Secondees benefit from the opportunity to be involved in a broader range of legal and commercial work. When they return to their firm, they bring this experience back to their practices – as well as a network of key client contacts developed through face-to-face interaction.

Investing in key relationships
As Tim Foster, UK managing partner at Reed Smith Richards Butler explains, secondments are an important part of many firms’ investment in their key clients. “We are very much a relationship firm and secondment arrangements are an excellent way to develop client relationships,” he says. “Clients appreciate secondments as a sign of our commitment to them and a reflection of the strength of the partnership between the firm and the client company.”
In-house legal departments request secondees from law firms for a variety of reasons, including dealing with a temporary increase in workload, providing cover for maternity leave or covering a vacancy while a replacement is found, particularly in markets where it is more difficult to recruit. Some companies establish a rolling programme of secondments as a way of managing headcount and avoiding employing permanent staff. Regulatory organisations, large corporations and banks are among those who rely on this type of arrangement to provide specific technical expertise and support. This partnership approach gives in-house legal departments an effective way of addressing a short-term immediate demand for resources, while offering lawyers on secondment an invaluable insight into the operations of the client organisation – not to mention a useful professional-development opportunity.
Large firms such as Reed Smith Richards Butler routinely send trainees and junior associates on three to six-month secondments to their major corporate and banking clients. A 2006 survey by The Lawyer revealed that 70 per cent of the UK’s top 50 firms offer trainees the opportunity to spend part of their training contract with a client1. According to Simon Firth, trainee solicitor partner at Linklaters, although secondments are an established part of trainee and newly-qualified lawyer development, their main focus is relationship management. “We have a relationship-based practice focused on a relatively small number of key clients,” he explains. “This means really understanding how they work and what they need from their law firm providers and concentrating our efforts on meeting that need. The secondment programme is a means of relationship building with those key clients.” However, Firth does not underestimate the benefits to the secondee. “In some practice areas almost everyone has been on a client secondment at some stage in their career. It is a useful training experience. It immerses people in a client’s business, and enables them to see our role from a different perspective, as well as giving them broader commercial experience,” he adds.
Secondments offer junior lawyers opportunities to take on additional responsibilities. As Edmond Curtin, a managing director in the legal department of Credit Suisse, which accepts secondments from Linklaters and other firms on a regular basis, observes: “One of the differences between a private law firm and an in-house legal department is that the latter may be less hierarchical. So, a secondment may create an opportunity for individual lawyers to assume greater responsibilities and thereby gain exposure to a wider range of legal experience that they might not otherwise get.” Curtin emphasises that although the bank has had an extremely successful secondment arrangement with Allen & Overy’s derivatives practice since the early 1990s, and equally successful secondment arrangements with other firms, it tries to resist relying on rolling secondments to manage headcount. Rather secondment programmes are used to meet specific needs in terms of workload and to facilitate partnerships between the bank and its external legal advisors.

Senior secondments
Secondments are not just for trainees and junior lawyers. Experienced lawyers are increasingly aware of the benefits to their practice and firms of gaining in-depth experience with in-house teams. A growing number of firms are offering senior lawyers, and even partners, to their major clients with a view to strengthening key relationships. Frances McLeman, a partner at Berwin Leighton Paisner, has been seconded three times in the past seven years. In 2000, she joined the New Millennium Experience Company – to wind up the affairs of the Millennium Dome – as part of the three-person executive team led by the company doctor David James CBE. In 2005, when the director of law was injured in the July 7 bombings, she stepped into the role at the London Development Agency. Most recently she was seconded to Tesco as director of insurance and claims.
McLeman identifies some key benefits of senior level secondments:

1. They demonstrate that the firm is prepared to make a major investment in key client relationships. Gaining a heightened understanding of the client helps to differentiate the firm from its competitors;
2. The firm develops a closer understanding of its clients’ commercial drivers and business strategy. This helps the firm to align its services to the client’s needs and grow its own business as the client expands;
3. They let the firm understand how the client’s senior-management team works, what is important to it, and the inter-relationship between different departments and contacts at the client organisation. It gives a real inside track on the way they operate;
4. They help the firm understand what clients want from their professional advisers at a broader level. Often a senior secondee will procure professional services on behalf of the client. The experience of being on the receiving end of pitches, assessing tenders for the client, and managing external advisers is invaluable – including the challenges of keeping external professional costs under control;
5. They give the firm sector expertise, which is useful when pitching for work in that sector;
6. They represent a useful personal-development tool and, provided the lessons are captured, others can benefit from these too. (McLeman gives seminars when she returns from secondment);
7. Public-sector secondments provide a valuable insight into the way the public sector operates. Clients who provide services to the public sector value the secondee’s hands-on experience;
8. Secondments may be used for broader strategic reasons such as corporate social responsibility or to gather a wider understanding of government and City institutions.

She also highlights some of the downsides, however:

1. It can be difficult to maintain links with other clients, so secondment may best suit partners with well-established practices who are supported by other partners;
2. Secondments are usually structured on a reasonably low-cost basis, so the partner is not generating significant fees. This means that there has to be recognition of the broader value being achieved from the secondment. The managing partner’s support is therefore crucial;
3. There is a potential for conflict if a partner is seconded to a client’s senior-management team while their firm provides legal services to the client organisation;
4. Other partners will need to look after the secondee’s clients and there may be concern about the ‘hand back’ process when the secondee returns;
5. The firm loses the benefit of that partner’s expertise, although this can be mitigated by attending key meetings and keeping in touch by e-mail;
6. It can take time to reintegrate and reassume relationships with clients and contacts once the secondment has come to an end.

Supporting the regulator
The primary purpose of secondments is to support client relationships – either directly, by sending lawyers to clients’ legal teams – or indirectly, through secondments to public sector and charitable organisations. The former supports existing client relationships, while the latter brings reputational benefits to the firm and the host organisation, as well as increasing the expertise of individuals and their firm.
These benefits are recognised by experienced lawyers who apply for secondments to regulatory organisations such as the Financial Services Authority and the Pensions Regulator. As Phil Ashford, secondment manager at the latter, explains, rolling secondments are an important part of the regulator’s strategy – secondees represent about eight per cent of its staff. They tend to be senior specialists with five to 10 years’ post-qualification experience (PQE) in corporate transactional work and insolvency. Many are from large City firms, although the secondment programme is open to all. “Deploying experienced lawyers from top firms gives us technical expertise as well as credibility and gravitas,” says Ashford. “As well as facilitating two-way knowledge transfer between the regulator and the profession, the secondee programme is changing the behaviour of the marketplace. When secondees return to their firms, they take the best practice they’ve learnt here back to their peers and clients.” This process is enhanced by the regulator’s alumni network, which encourages former secondees to maintain contact with each other and the regulator.
Shamim Akhtar, a senior solicitor with City firm CMS Cameron McKenna, is currently finishing a six-month secondment to the Pensions Regulator, which has added an extra dimension to her role after seven years as a pensions specialist. “My time here has given me a clear understanding about how the regulator operates,” she says. “I’ve been able to focus on areas that will have a direct impact on my work in the City. I have been able to contribute to the work of the regulator and the knowledge I have gained here will, in turn, enable me to provide an enhanced service to my clients.”

Spreading the net
In addition to gaining an understanding of the day-to-day work of a commercial legal team, secondees tend to participate in the social life of the client organisation and often stay in touch with the contacts they make. For junior lawyers, in particular, this represents an investment in the future, as those contacts move up the organisation and are in a position to offer instructions. These and other advantages are leading junior lawyers to request client secondments as part of their professional-development packages. However, this has produced some key challenges for both firms and their clients.

Addressing key challenges
Times are changing and firms are conscious of the need to focus on maintaining and enhancing their market position. As Foster observes, “A key feature in the legal landscape is that major companies are reducing the number of law firms they use with a view to increasing efficiencies and reducing costs. As a result, they have fewer but deeper relationships with law firms. Secondees are an important part of that two-way process: supporting the client, deepening the relationship and binding the two organisations closer together.”
As lawyers and their clients recognise the value of the secondee relationship, manpower has become a key challenge for many firms. Foster explains that Reed Smith Richards Butler is currently developing a set of best practices focused on making the most of secondments. “Like other firms, we get a lot of requests for secondees and we cannot meet them all. For example, we may not have sufficient resources at a particular time. Therefore we are establishing criteria around evaluating which secondments have the most strategic value and merit the most investment.”
Firth agrees. “What we recover from secondments is significantly below what we would recover if the secondees were working on client matters in our office. So we have to control how many people we send out to any one client.”
Berwin Leighton Paisner faces the same dilemma. “There’s so much demand from clients to send people on secondments that we have established a process whereby a group of partners examines the business rationale before we commit to a secondment at any level,” adds McLeman.
Of course, there is an economic aspect to any proposed secondment, of which both sides to the arrangement have become more conscious. “It has become more difficult to settle upon an arrangement that is mutually satisfactory,” says Curtin. “In the past, law firms were happy to send us people on secondment at no charge as it meant that their lawyers were actively employed doing interesting work. More recently, as the bull market has come to a head, the firms rightly have had to manage their resources more carefully. It is now not unusual for the firms to seek to charge for secondees. This underlines the importance to us of getting people who can make an immediate contribution.”
Another key consideration is the risk of losing valuable associates to the host organisation. Secondments give people the skills and experience to move in-house, as well as a taste of the life of an in-house lawyer. However, client organisations recognise that, however successful a placement may have been, recruiting secondees is not usually a good idea as it contradicts the primary purpose of secondments – to enhance the relationship between the two organisations. Curtin identifies two key reasons for resisting this approach. “Firstly, we don’t want to undermine the law firms’ desire to send us good people on secondment; and secondly, it is useful for us to deal with lawyers at Linklaters, for example, who have spent time on secondment here and now act for us as outside counsel,” he says.
The Pensions Regulator is equally reluctant to deter firms from sending experienced lawyers on secondment. Its website includes a commitment not to recruit secondees.
Nevertheless, firms recognise the importance of maintaining close contact with secondees. At a junior level this tends to be straightforward, as secondees tend to be placed in legal teams that have regular contact with their firm. However, it is important for senior lawyers on secondment to keep in touch with their practice groups and clients, and this often requires considerable effort on their part. Akhtar visits her office at least once a month and maintains a regular dialogue with her colleagues and clients. “Although my work at the regulator is confidential, if there are questions about processes and procedures I am their first port of call,” she says.
As a partner, McLeman’s secondments have sometimes involved leading teams that include lawyers from Berwin Leighton Paisner. However, she also makes a personal effort to keep in touch with the rest of her practice and her fellow partners. “You have to work at it,” she says. “Whenever I can, I attend partner meetings, work group meetings, evening training and morning seminars. If I’m in London I pop into the office and chat with people. I use every possible opportunity to keep in touch.”

Reaping the rewards
The success of a secondment ultimately depends on the secondee’s ability to adapt to working in a different environment and hit the ground running. In addition to the appropriate technical expertise, you need to be a self-starter who enjoys a challenge.
Secondments represent a significant investment by lawyers and their firms in terms of fee generation and client-relationship management. It is therefore critical that firms limit their secondments to those that genuinely support the firm’s business priorities and key relationships with its major clients. It is equally important to offer lawyers relevant secondment opportunities that support their professional and career development. The organisations and individuals in this feature illustrate that striking the right balance requires adopting a strategic approach. ?

Reference

1. BEGUM, H. ‘Getting out of the office’ posted on The Lawyer.com on 8 November 2006 http://www.thelawyer.com/cgi-bin/item.cgi?id=122894&d=11&h=24&f=23