The Upside of Outside Counsel

Spectrum Brands’ Paul Bokota believes outside counsel get a bad rap. He says the key to changing that is in treating them as more than just vendors.

In a corporate setting, outside counsel can be a godsend. They can dole out expertise, tidy up overflow and, by and large, make your life easier. So why in corporate culture do they so often get a bad reputation?

The answer is obvious: money. When companies are looking to cut costs, outside counsel is often first on the chopping block. For Paul Bokota, however, the explanation is a little more complicated.

“I rely on outside counsel a lot,” Bokota says. “I’m very conscious of the spend, but if I need to spend money to make sure the legal advice we’re getting is very good, and the legal advice I’m giving is protective of the company, then I’m not shy about spending the money, to be honest.”

When you have as many responsibilities as Bokota, it’s always good to have that helping hand. As division vice president and division general counsel with Spectrum Brands, he oversees everything from transactions and mergers and acquisitions to compliance and antitrust within the company’s $1.3 billion hardware and home division. Even if one hasn’t heard of Spectrum, they have certainly heard of the brands the company owns, which include Rayovac, Armor All, Kwikset, Pfister, and even the George Foreman Grill.

Each brand has its own regulations and peculiarities. Without the help of outside counsel, Bokota might drown in contracts and textbooks. He says there’s roughly ten or so firms that he regularly calls upon, some of which provide assistance with international law while others manage overflow, offer guidance and, in some situations, provide a judgment call. He cites one prominent firm he almost fired for weighing theoretical concerns when he called them for a yes or no answer.

“You have to be commercially savvy and business friendly,” Bokota says. “I need to make a decision, and I need them to help me make that decision. I don’t need this to be a law school exam. I need to know which hand is the right hand.” Because Bokota relies heavily on outside counsel, he’s developed a strong sense of what he looks for in a collaborator.

“I look for people who want to learn my business,” he says. “Obviously, they need to be technically very good, but it’s also very important for me that they get a good sense of my risk tolerance. I’m more risk tolerant than a lot of outside counsel. I’m willing to spend a little more for the people who fit my other criteria. I’m not a bargain-basement guy—sometimes to management’s chagrin.”

Careful in the selection of those with whom he works, Bokota goes to great lengths to cultivate a happy, mutually beneficial working relationship. He bristles at the idea of treating outside counsel as “a vendor,” a sentiment that’s been bolstered by his own experience as a general counsel, which allows him to function as a business leader rather than just “a contract guy.”

“I don’t want to be a vendor for my people, either,” Bokota says. “I view outside counsel in the old-fashioned way. I really view them as my counsel, not just as my lawyer.”

Fostering those relationships includes Bokota personally meeting each and every outside counsel he employs. He recalls a trip to China where he made a stop in Shanghai specifically to spend time with a colleague at a Chinese firm. Putting a face to a name, Bokota says, is integral. He’s also eager to bring outside counsel to meetings at Spectrum’s corporate headquarters, where they can meet the team and get a feel for the business.

“I’ve even had outside counsel come with me on tours to factories,” Bokota says. “It’s important for them to see how the products get made. We do things to get them more embedded in the business so they can hopefully give us better advice.”

Spectrum also establishes alternative fee arrangements with outside counsel that can often provide a greater value. Most outside counsel operate on an hourly basis, but Bokota says he’s becoming more interested in fixed-fee arrangements and not-to-exceed contracts. This approach gives him more certainty while at the same time demonstrating a level of trust with his outside counsel.

Costs still must figure into Bokota’s decisions. In his opinion, however, it’s not about eliminating outside counsel so much as winnowing your pool down to a curated selection of firms with whom you’ve established a healthy relationship.

“I think we use too many law firms,” Bokota admits, noting that Spectrum is hoping to narrow it down by implementing more RFPs, which allows firms to be more creative and also offers a safe space for them to propose their own alternative arrangements.

This approach is rooted as much in identifying personality and humanity in the outside counsel with whom they choose to work.

“We’re starting to ask law firms more of, ‘What can you offer us? What do you think might be helpful here?’” Bokota says, adding that he wants to see the minds behind the firms, not just the cogs in their machine. “I think outside counsel get a bad rap because they’re a necessary evil, and some people view them more as necessary and some more as evil.”

Obviously, Bokota’s opinion is the former. A sound outside counsel is worth the cost, he says, especially if one has cultivated a relationship into something that transcends a mere transaction. No one wants to be viewed as a vendor, after all.
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Payne & Fears llp:

“I’ve worked with Paul for over fifteen years. He is a smart, sophisticated attorney with an unusual talent for understanding the intersection of law and business in order to achieve his company’s goals.”

—Jeffrey K. Brown, Partner