Verizon GC: We Don’t Need Law Firms At Our Business Meetings

A pedestrian talks on his mobile phone while walking past a Verizon Wireless store in San Francisco, California, U.S., on Wednesday, April 15, 2015. Photographer: David Paul Morris/Bloomberg

When Big Law Business has asked general counsel over the last eight months where they’d like to see outside law firms improve, a good chunk of them have given the same answer: “Firms should learn more about our overall business.”

Craig Silliman, executive vice president for public policy and general counsel at Verizon, has a different take: “One pitch that you sometimes hear from law firms is, ‘We want to be your strategic partner, we want to sit inside your meetings, we want to get to know the business, etc.,'” he said. “That is what our in-house legal team does. We don’t need outside counsel to do that.”

Silliman explained that as corporate legal work has become more complex and more interesting, talent has migrated in-house, increasing the capabilities of corporate legal departments, and decreasing the need for outside law firms to be anything but specialists.

“We have a very robust, very talented in-house legal team who forms the connective tissue of the company’s strategy, and a how our legal initiatives fit within that,” Silliman said, “and so outside counsel slots in on tactical specifics, specialized issues, not as the partners who sit at the table and learn the overall corporate strategy.”

Headquartered in New York City, Verizon Communications was formed in 2000, as a result of the merger between telephone companies GTE Corporation and Bell Atlantic. The company’s name is a portmanteau of the words “veritas,” which is Latin for truth, and “horizon.” Headquartered in New York City, Verizon made $127 billion in 2014.

In a recent interview with Big Law Business, Silliman discussed all the ways the relationship between inside and outside counsel has evolved, as well as recent developments in cybersecurity.

Below is an edited transcript of the first installment of the interview.

Big Law Business: What’s most important to you in an outside law firm?

Silliman: We have a lot of people in-house who are deeply embedded with the business, people who have a good general sense of the business, an ability to issue spot, an ability to support the business on what I’ll call a horizontal basis. By definition, when we’re bringing in outside counsel, we’re bringing them in as a vertical staff, as a highly specialized resource on one particular issue.

The best outside counsel understand they are the client of the in-house legal team, and should make that team look good.

Outside counsel who are best at what they do understand that their one vertical issue fits within a larger strategic framework of legal policy, regulatory, and business issues that our in-house team is supporting the company on. Understanding how their role fits within a larger framework, and therefore the types of decisions we make about how to handle a case, how to move forward on something, have to be viewed through that larger lens.

Photo Courtesy of Verizon
Photo Courtesy of Verizon

Related to that, I think outside counsel always serve their clients best when they understand that they are the client of the in-house legal team, and should make that team look good, understanding that the legal team in-house has a set of clients they’re interacting with on a larger basis.

As far as pet peeves go, I can’t say, “Boy, I have a big complaint about some of our outside counsel,” because if I did, we would find other outside counsel.

Big Law Business: So if other firms wanted to work with you, what would turn you off?

Silliman: One pitch that you sometimes hear from law firms is, “We want to be your strategic partner, we want to sit inside your meetings, we want to get to know the business, etc.” You have to understand that, particularly at today’s billing rates and with the way billing is structured, we have an in-house legal team that sits with the clients every day, and that’s part of the larger strategy of the business.

That is what our in-house legal team does. We don’t need outside counsel to do that, and more to the point, it wouldn’t be cost-efficient for us to pay outside counsel to sit in meetings just to hear what the business is thinking, or even what the in-house legal team is thinking in a larger strategic sense.

We’re bringing you in as outside counsel for your highly specialized resource, not to become the generalist who understands the business inside out.

I’m not trying to insult outside counsel by saying that, and saying we don’t need you to do that, but the fact is we’re bringing you in as outside counsel for your highly specialized resource, not to become the generalist who understands the business inside out.

That’s not the model anymore, especially for a company our size, with a legal department our size. We have a very robust, very talented in-house legal team who forms the connective tissue of the company’s strategy, and a how our legal initiatives fit within that, and so outside counsel slots in on tactical specifics, specialized issues, not as the partners who sit at the table and learn the overall corporate strategy.

The other thing, at least for a company like Verizon, where we have a fairly broad in-house presence, and people on the ground in many countries around the world, is we have the ability to pick the very specialized resource that we need from specific law firms on whatever issue we have. Sometimes part of the marketing pitch from law firms is, “We’re a big global firm. We can be your one-stop shop for all legal services.”

That may be useful for some companies, but for us, I don’t think that’s a particularly compelling value proposition, because we have enough feet on the ground. We have enough people in-house that we can actually go out and pick and choose who the specialized resource is in a given firm, in a given country, to provide the needs that we have on that specific issue.

Sometimes part of the marketing pitch from law firms is, “We’re a big global firm. We can be your one-stop shop for all legal services.” For us, I don’t think that’s a particularly compelling value proposition.

Finally, the model of law firms has changed somewhat, as you’ve seen a lot of the work that traditionally was done by first and second year associates — all those document reviews and things like that, which formed the profitability base for law firms — has been automated, or it has been moved to lower-cost legal solutions outside the US or elsewhere.

I think that has a couple of implications. One is the profitability model has changed, which is changing to some degree the way partners see in-house life. It’s not necessarily a situation where you get to a certain level, and you have a machinery behind you of associates earning profits.

Partners need to continue working for their business throughout their time in law firms, and when you combine firms’ billing rates, it shifts the balance in a couple of ways. One is simply math: If I say, “I’m going to spend X number of hours on a project, and this is the billing rate with the law firm, ” I can quickly back that into the point at which I can hire someone in-house at a lower overall rate.

It used to be that the end-all be-all for a legal career was to be in law firm. But it’s not the only place that you can find interesting and challenging work anymore.

The second part of that is it used to be that the end-all be-all for a legal career was to be in law firm. It’s still a great career, I don’t mean to say it’s not. There are many, many people who have incredibly rewarding careers within law firms, and incredibly interesting and challenging work to be done there, but it’s not the only place that you can find interesting and challenging work anymore. Increasingly over the last 20 years you’ve seen a shift where people can do very rewarding, interesting, complex, challenging legal work in-house as well.

So you put those two pieces together and say, “There’s simply a cost benefit analysis that says that at a certain billing rate times a certain number of hours, I can just in-house this for less than continuing to send that to a law firm,” combining with the fact that there is a pool of firm lawyers who are willing to move in-house to do that kind of interesting, complex work that they now have access to in an in-house environment, and it means that that model is continuing to shift.

You see more and more people bringing skill sets in, including things that in the past people wouldn’t have thought of bringing in-house, like M&A legal work, which is almost always outside counsel. You see more and more companies bringing more of that in-house.