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CLO on outside counsel: I'd hire Attila the Hun if he's good at his job

September 7, 2016  |  7 min read


This is the second part of our discussion with Mark Herrmann, chief counsel of the global insurance corporation Aon and author of authoritative legal books like "The Curmudgeon's Guide to Practicing Law."

Mark is not a curmudgeon. But, having spent 17 years at a large law firm, he may know one or two.

In part one of this interview, Herrmann spoke to the differences between law firm and in-house practice, how experience with the former may inform the latter, and how developing people skills can facilitate a successful transition. Here, in part two, we learn that, when it comes to actually hiring attorneys, people skills don't actually move the needle. Not for Mark.

Just do the job. And do it well.

Below, we turn to the topic of how in-house legal departments select the outside firms with whom they work, and how those firms can distinguish themselves from the competition.

Logikcull: Let's talk about alternative fee arrangements, which you've written about before. Basically, your approach is to bundle up all of a certain type of case and auction them off as a package to the lowest bidder. I would think that big firms are better equipped to take on this work because it requires scale. Smaller firms, who are potentially more likely to be innovative, are at a disadvantage. Do you think that's an accurate assessment? 

Mark Herrmann: I guess I’d say larger firms are less likely to be in a position to innovate, because you have more resources devoted to overhead and the lawyers don’t have to learn the nuts and bolts of technology. At a firm that has 5 or 6 lawyers, they’re all going to know the technology a little bit, because they have to. Because there isn’t just a guy sitting there who is taking care of it for them, they have to do it. And in a big firm you can call in the tech guy and have him help you with it. So to that extent, you’re not forced to learn the stuff.

On the other hand, big firms have a lot of resources, and can use cutting-edge technology, and can deploy it because they can afford to. So I’m not sure that one is more skilled technologically, or necessarily more innovative, than the other. I just think that they present different opportunities and different requirements.

Logikcull: What do you most value when you’re working with outside law firms?

MH: You know, if I were to hire Atilla the Hun, I’d say, "The guy’s pretty good at his job but he’s got a mean streak. I’ll take him!" I will judge the lawyer on whether or not he does his job. And an awful lot of other things -- like whether he's friendly -- will go to the side. So as long as he’s taking good depositions, and writing good briefs on our behalf, and has good ideas about how you make a case go away, that is the lawyer that I want. Beyond that, whether or not the person calls to say hello, or does stuff on the side, or is always sending you stuff is really irrelevant. All that I look for is whether or not they are good at their job, and they can get the work done.

"As long as [outside counsel] is taking good depositions, and writing good briefs on our behalf, and has good ideas about how to make a case go away, that is the lawyer that I want. Beyond that -- whether or not the person calls to say hello -- is really irrelevant."

Logikcull: So, how easy they are to work with is not a big consideration for you?

MH: I guess that if you were really impossible to work with that might be disqualifying, but I haven’t had anybody who is so seriously hard to work with that you just couldn’t do it.

Logikcull: When you’re making decisions about which of your organization's legal and compliance functions to keep in house and which must be outsourced to outside counsel or other service providers, how are you weighing those decisions? What factors are you considering?

MH: So we do an extraordinary amount of work in house. I would say for litigation, everything is done in house until we get sued basically, and as soon as we get sued we hire an outside counsel in whatever the jurisdiction is to go to court for us. But almost all pre-litigation matters we are doing in house. And even after we get sued, a fair amount of the work is being done in house, although you hire an outside lawyer in that case. For other stuff, you know small deals, that’s not my department. I don’t do mergers and acquisitions. But we do most deals in house, and we are only going to outside counsel for the larger ones.

Logikcull: I assume that you have a list of preferred law firms, is that the case?

MH: Well generally there is one law firm, because we’ve done an alternative fee agreement that says that all cases below a certain size involving a certain business unit go to a single law firm. So that was packaged up and sold off, and everything goes to them. Once you are outside of cases that routinely go to that law firm, or where a conflict means they can’t take it, then we look to what you could call a preferred list. There are people we've worked with in the past and know to be good. And that’s who we’re going to go to for the new cases. And getting on that list is very hard. We’re not going to just take a chance -- "Here’s some lawyer who says that he’s good. Maybe we’re going to hire him." That would be ridiculous. We go to people who we’ve worked with in the past and we know to be good, and we will go to them again for whatever their expertise is.

"We're not going to just take a chance on some lawyer who says he's good, and maybe hire him. That would be ridiculous. We go to people who we've worked with in the past and know to be good."

Logikcull: So the one firm that you’re working with, with whom you have an alternative fee arrangement, how long does that agreement last? Is it a yearly thing, and then they’re reevaluated? Or is it longer than that?

MH: We enter it once for a three-year term, and at the end of that term we enter it for another three-year term. At the moment, we are halfway through the second term. And at the end of this three-year term, we will again ask people to come in competitively and it will either go to the incumbent or it will go to somebody else.

Logikcull: I want to wrap up by asking a little about technology. How often are you making choices about the technology that you’re team and you’re departments are using internally? Do you play any factor in that decision making practice at all?

MH: Well, annually we have the law department and the technology people look at our applications and systems to make sure that we’re meeting our needs with whatever has to be done. But I personally am not involved in that process. That is people who are more likely to be hands on with the equipment, and seeing whether or not the software works, are the people who are doing it. But every year we are reviewing our systems to make sure that we’re good. And then on an as needed basis we will look at an entire product category review and do a review to see whether or not we should upgrade, for example, our legal hold technology, or if we should go to somebody else for something.

Logikcull: Do you have a technology committee, or is it the case that different people are just getting pulled together at different times?

MH: Certainly there is nobody in the law department who has a formal role of being responsible for making sure the technology is right. And on the technology side, I couldn’t tell you. That is, we tend to see the same people over and over again thinking about the technology. But I don’t think their job is, guy who makes the technology right. I think they’re using the technology and as a result they’re the logical person to be assigned to those teams.