Interview: the client equation

Jonathan Spencer, vice president and associate general counsel, Law Department, Cable & Wireless Global

The past year has been a tough one for business and many law firm clients have been forced to cut down expenses and justify their spend. In such a market, law firms must work ever-harder to understand and meet the needs of their clients. Caroline Poynton talks to Jonathan Spencer, vice president and associate general counsel at Cable & Wireless Global about their needs and expectations. In particular, he argues that it’s all about developing a co-operative approach and a spirit of mutual understanding.

1) Can you tell us about your role at Cable & Wireless and your career development to date?

I am currently responsible for overseeing the legal support for the operations and marketing side of the business. The department is overseen by the group general counsel, Dan Fitz and supported by vice presidents and associate general counsels, who each oversee a team of lawyers and are responsible for either a region of the business or a particular functional area of the company. In my role I am responsible for advising the business in respect to the legal issues arising out of the operation of our network. That includes internet issues, licensing, supply contracts, outsourcing and, on the marketing side, includes press releases, advertising copy and also the management of our trademark portfolio.

I worked with traditional firms for approximately 12 years. Then, about four years ago, when Cable & Wireless began its internet operations by acquiring MCI in the US, the company needed attorneys who understood the business.

I was hired at that time in the US and I was promoted to vice president and associate general counsel a year later. In November 2000, I was moved to London where I’ve been ever since.

2) What would you say were the main characteristics of working in-house rather than for a traditional law firm? Could law firms learn anything from your experience of managing an in-house legal department?

In-house and traditional law firms are in some ways the same but in many ways, they are very different. In-house has to analyse the cost benefit and risk of a particular bit of legal advice to decide whether the risk is one worth taking for the business. Outside counsel are mainly involved in analysing all the risks and will advise you on the things you should do to protect yourself from any and all risk. In advising on all the real and theoretical risks, law firms are providing exactly the service we need them to supply.

For my part, because I work within the business on a day-to-day level, I am better able to make specific business assessments based on advice from external law firms.

3) How do you find managing relationships with external law firms and lawyers? Is there an air of mutual understanding or can it be difficult to comprehend each other’s needs?

Our relationships are generally very good. The good firms and the best lawyers work hard to make the relationship as easy as possible. That is not to say that there aren’t problems from time to time, but when you work with a good firm, they’re quickly addressed by both sides. Truthfully, if the law firm doesn’t quickly learn our needs, they’ll soon find they’re no longer a firm that we use.

We can be very demanding and we realise that we are the client in this situation and we have expectations. However, we know that it is something that you work at and you don’t just assume it’ll happen. We work closely and meet regularly with our law firms to ensure that we all know what is going on.

4) The past year has been a difficult one for many companies – how has this affected your legal spend and choice of legal panel?

Recent times have stressed our need for a service that offers value-for-money. This means that, on one level, we’ve informed law firms that we will not accept an increase in rates. On the other hand, we’ve tried to concentrate work with certain core firms. We look to leverage our relationships with firms as much as possible, for example, we look to firms to help us with training needs and to support us with their libraries of documents.

We also do a lot of secondments with firms using secondees from firms that we have a relationship with. This is beneficial for us because it helps us obtain labour when we need it and it helps law firms get a better understanding of our business.

I think it’s a bit of a truism that in difficult times, the amount of legal work needed increases. What companies look for, however, is how to keep the fixed cost as low as possible and have as many variable costs as possible. Hence, we will rely on our law firms even more in tough times, but then again, there will be a greater emphasis on getting value for money.

5) How would you currently rate the service you receive from law firms? Do you think they’re getting their client service right?

Yes, I think on the whole, firms are getting it right. They understand the challenges facing us and they are responding appropriately. They know that they will get rewarded by getting a greater share of our business if they come through.

6) What do you think could be improved and do you believe the firms you work with are aware of the improvements they should be making?

There are always areas for improvement. I think one area where there is definitely room for improvement is in getting greater visibility in the billing process. In particular, we are trying to encourage firms to move to electronic delivery of bills and invoices that include more detail on the process. In the US, it’s much more common to provide greater details on the bills and that’s useful, not simply because it provides greater accountability or because we want the information for information’s sake, but it gives a greater transparency that allows us to identify how we’re spending our money and how we might improve our spending on law firm expenses.

Having that billing information helps us to forecast how we’re overspending and underspending. It’s very important because we have a budget to work from and having that visibility means that we can sometimes say we need to readjust our spending but at other times say, we’re fine, we’re well within our budget – keep on going.

Another thing law firms need to do is improve their billing options beyond just the hourly rate. Too often, firms are too heavily dependent on the billable hour and I think that if they want to build better relationships with companies and with in-house, law firms need to provide other rate structures that offer value for money and the opportunity to provide different types of advice, whether that be over the phone or in a standard type of document. We have tried flat rates, but unless we use a competitive bidding or RFP approach, rarely do flat rates offer value for money.

7) Do you think in-house lawyers will take on more of the company’s legal requirements themselves? Should law firms be worried?

Law firms and in-house lawyers each have their own strengths and weaknesses and require different skills. I do not believe that either has too much to worry about. There are some things that in-house lawyers can do far better than law firms and vice versa. It’s really about striking the right balance. For example, we think that most customer-facing work is better managed in house. On the other hand, in addition to the times when we simply need more hands to do the work, there are many speciality matters that are not part of our core business, where it does not make sense for us to bring it

in house because we cannot do enough to hone our understanding of the subject, stay current and therefore, do it well. You need to go outside for the expertise to properly advise the business.

Equally, there are some areas where the market demands that we rely on outside expertise and I doubt that this is going to change. In some areas, the law offers greater protection when we use outside legal advice. This discrimination, particularly in some European countries, against in-house lawyers is not necessarily the best policy – for example, you don’t have the same confidentiality protections. We are working with groups such as the Global Corporate Counsel Association to try to address this, but at the moment, it’s a fact of life.

8) What expectations or thoughts do you have for your ongoing relationship with external firms?

I see a co-operative approach in the future. I rely very much on external counsel and I don’t see that changing at any time in the future. Similarly, outside firms must view in-house, not as competition, but as their entrée into the business and we can give outside lawyers better insight into what the companies need so they can better serve our mutual client.

Jonathan Spencer is vice president and associated general counsel in the law department at Cable & Wireless Global. He can be contacted at: jonathan.spencer@plc.cwplc.com