The inability of law departments to offer a fast turnaround to their clients was a recurring theme among respondents to the Corporate Legal Times/PeerPoint Technologies survey of chief executive officers (CEOs) and chief financial officers (CFOs).
The questionnaire, conducted in conjunction with the American Management Association, surveyed 114 executives.
When asked how in-house legal departments could provide better help in running the company, the message was clear. "Be more timely," wrote the vice president of a railroad company. "[The legal department is] very slow in providing preventative advice."
The CEO of a chemicals company also believed there was a need for "faster reaction time". And a "quicker response" is what the president of a materials-handling company wanted. "Be proactive," was that executive's message to the company's legal department.
About 43% of top corporate executives were only 'somewhat satisfied' with the work of their company's legal department – while 7.1% said they were 'dissatisfied'.
But although corporate counsel came under fire, outside lawyers fared even worse. Only 25.9% of senior executives said they were 'completely satisfied' with their company's outside counsel – while 71.4% said they were 'somewhat satisfied'.
At one end of the scale, the CFO of a pension-fund management company wrote: "[The] general counsel is a strategic thinker and intensely in tune with the needs of constituents. This has enabled us to develop plans sensitive to, but not overpowered by, legal issues." But at the other extreme, when asked to describe the legal department's contributions to the company's strategic planning and goals, the CFO of one manufacturing company simply wrote: "None".
The cost of running the department was another issue that the survey studied. Only 12.4% of respondents said that the legal department's budget was a 'very important' measure of overall value – while 76.1% said it was 'somewhat important'.
Having said that, respondents were evenly split when asked to judge their satisfaction with the internal cost of legal services. Forty-five per cent described themselves as 'completely satisfied' and 45% described themselves as 'somewhat satisfied' with the law department's cost. Almost 10% said they were 'dissatisfied'.
Law firms bore the brunt of respondents' dissatisfaction. Only 14.4% of respondents said they were 'completely satisfied' with the cost of their company's outside counsel and 21.4% said they were 'dissatisfied' with the cost of outside counsel. About 64% said they were 'somewhat satisfied' with outside counsel costs.
"Internal costs are not an issue to CEOs," believes W Marc Schwartz, president of PeerPoint Technologies, "but responsiveness is an issue. Outside legal cost is an issue, and that's consistent with what the GCs would say."
Schwartz says that even though the issue of cost is less important to CEOs in relation to other items in the survey, the issue of cost in itself is important.
"Cost control will continue to be an important issue to GCs," he says. "But I would recommend that they continue to focus on the balancing of internal and external costs, and on managing those costs. Their clients want responsive service, they want proactive service – and they want it at a reasonable price."

Preventative work important but falls short
Not surprisingly, 93.8% of respondents said the in-house department's quality of work was a very important measurement of value and nearly 90% said that responsiveness was a very important factor.
But only 13.3% of respondents gave their in-house department's performance an 'A' grade when it came to offering fast turnaround. More than 20.4% of respondents awarded their department's responsiveness a 'D' or 'F' performance. (On average, legal departments earned just a 'C-plus' in this area.)
Only 37.8% of respondents said they were 'completely satisfied' with their department's preventive legal counselling. (54.1% said they were 'somewhat satisfied', and 8.1% were 'dissatisfied'.)
But when satisfied with an in-house department's efforts, respondents often listed preventative counselling among the department's most significant contributions to corporate strategic planning and goals and as a valuable aid to decision-making.
The vice president of a consumer goods company wrote that the department's contributions include identification of: "trend[s] and expected changes in legislation, efforts to reduce short-term and long-term litigation liability [and the] development of prevention programmes."
The CEO of a computer manufacturer said that one of his legal department's most valuable contributions to decision-making was that the department "anticipates potential problems". The president of a financial company cited the value of the legal department's proactive counselling as one of its most significant contributions.
And the CEO of a distribution company held in high regard the legal department's "pro-active training on contract and employment laws to line managers and supervisors".
On average, respondents gave the legal function a 'B-minus' for its creative and effective preventive legal advice. In the region of 20% earned an 'A' grade, 44.7% earned a 'B' and 25.4% earned a 'C'. Only 2.6% of respondents gave their departments an 'F' grading.
Preventive counselling was deemed by 59.3% of respondents to be a very 'important measurement' of the legal department's value, while 40.7% said it was 'somewhat important'.

Becoming yes-men and women
The survey results suggest that both legal departments and law firms still have to fight to erase the perception of lawyer as deal breaker.
"Give me more alternatives," offered the vice president of a mortgage company. "Figure out a way to do a deal or say 'yes' with more alternatives. Saying 'no' does not help solve any business issues."
Almost 48% of respondents said they were 'completely satisfied' with the legal department's advice on transactional work (compared to 39.4% who said they were 'completely satisfied' with the advice of law firms).
Forty-five per cent said they were 'somewhat satisfied' with their legal department's advice, and 7.2% described themselves as 'dissatisfied'. In comparison, 56% of respondents were 'somewhat satisfied' with the law firm's advice, and only 4.6% said they felt 'dissatisfied'.
Respondents were slightly more happy when judging the advice of their in-house legal departments on litigation matters. One-in-two said that they were 'completely satisfied' with the advice they received, while 45.9% were 'somewhat satisfied', and 3.7% were 'dissatisfied'.
Law firms, on the other hand, received lower marks: Only 28.6% said they were 'completely satisfied' with the advice of outside counsel on litigation matters. About 3% were 'dissatisfied' and 68.8% were 'somewhat satisfied'.
Litigation and contracts
Litigation was most commonly cited as the top legal concern facing companies today. Contracts was the second-most cited practice area. Employment problems ranked third in the list of top concerns and challenges and labour ranked fourth.
Environmental law – which many lawyers say has been slowing down – ranked fifth, and intellectual property – which seems to be on most lawyers' lists of hot practice areas – ranked sixth.
Two somewhat surprising entries bring up the end of the list: anti-trust and international law tied for 12th place in the executives' opinion of top legal concerns.

Checking on quality
Some of the survey's results are especially interesting when viewed in the context of the Corporate Legal Times/Arthur Andersen Survey of General Counsel [Law Departments Will Do More With Less, July 1998, p1].
For example, 93.8% of executives who responded to the survey of CEOs and CFOs said that the department's quality of work was a 'very important' measurement of value. But of the general counsel who responded to the GC survey, only 73.3% thought their corporate clients considered quality of work to be a 'very important' measure of value.
Quality of work was considered a somewhat important measurement by only 6.2% of executives, compared to 25.2% of general counsel. And while 1.5% of GCs surveyed said their corporate clients did not consider quality of work to be an important measure of value, none of the executives who responded to the survey of CEOs and CFOs thought that was the case.
Similarly, 89.3% of executives said that responsiveness was a 'very important' criterion when measuring the value of the legal function – but only 78.9% of general counsel thought their corporate clients considered responsiveness to be that important.
On the other hand, general counsel may overestimate the value of a matter's outcome. Three-quarters of executives said outcome was a 'very important' measurement of law department value, but 89.5% of general counsel thought their corporate clients considered it to be 'very important'.

Contributions vary from excellent to none
Only 24.5% of all respondents to the survey of CEOs and CFOs said that they were 'completely satisfied' with their legal departments' contributions to corporate strategic planning and goals. A majority – 58.2% – said they were 'somewhat satisfied', while 17.3% were 'dissatisfied'.