Landing a large client with repeat business can be a competitive process.

As part of any “beauty contest” to try and get that new work, law firms must stand out from the pack, often doing so by highlighting their bench of expert practitioners, the diversity of their teams or successes in prior representations.

Nonetheless, the client often has buying power and may use it to make demands of its law firms based on a desire to ensure uniformity among representations, manage costs and ensure consistency among representations by different lawyers.

In many client matters, lawyers will begin a new client representation with their firm’s standard engagement letter. But, in matters involving large clients with repeat or significant legal needs, clients might instead adopt “outside counsel guidelines” as a condition to the work.

Guidelines can cover a host of topics, from billing protocols and procedures to specific firm technology requirements. In such situations, the outside counsel guidelines may take the place of the engagement letter and govern the terms of the relationship (and counsel’s obligations to the client).

Of course, agreeing to a client’s outside counsel guidelines can help law firms obtain work in a competitive marketplace. But, the guidelines could create headaches for firms that do not take the time to thoroughly vet them, assess the firm’s capabilities to comply or properly implement the required protocols. Below are some guidelines for navigating these situations.

Review the Guidelines

Outside counsel guidelines can have the same binding effect on the parties as a traditional attorney-client engagement letter, especially when countersigned by the attorney and client. Thus, it is critical that firms agreeing to outside counsel guidelines actually read them. A firm that does not comply with a client’s guidelines because it didn’t take the time to review them could find itself losing the work.

To avoid such problems, many firms will have their in-house general counsel or another designated individual review guidelines for all the firm’s clients to help ensure consistency firm-wide. Understanding what the guidelines entail is the first step to assessing whether the firm can comply with the client’s wishes.

Assess the Feasibility of Compliance

Upon review of the outside counsel guidelines, many firms will undergo an honest assessment of whether total compliance is feasible. There can be tension between the desire to land a new and potentially lucrative business opportunity, on one hand, and the law firm’s realistic ability to comply with the terms imposed by the client on the other.

By way of example, some outside counsel guidelines will require a specific protocol or level of cybersecurity protection at the firm, given that the firm will house confidential information belonging to the client. The firm must candidly assess whether it is able to comply with the client’s standards. It may be that the firm would have to overhaul its existing systems to meet the client’s expectations, which could be prohibitively expensive.

Agreeing to guidelines with which the firm is unable to comply could expose the firm to liability or claims of breach in the future. Thus, at the outset, the law firm can either take steps to comply with the protocols or can advise the clients as to the level of protection the firm is able to provide. The parties may be able to negotiate on that point (and others).

Consider Other Risks to the Firm

Standard engagement letters often are drawn to define the attorney-client relationship and, at times and where permissible, to define the scope of the relationship with the client. However, if the attorney-client relationship is governed solely by the client’s outside counsel guidelines, some of the protections of traditional engagement letters might not be in place.

In addition to reviewing the terms of the client’s outside counsel guidelines, it can be helpful for the law firm to ascertain whether there are any terms to add or supplement in order to protect the firm’s interests.

For example, outside counsel guidelines may use expansive terms to define who is the “client,” including not only the direct corporate client but also related entities. Such a scenario could create complications for a law firm’s future conflicts analysis in determining whether other matters are adverse to the “client” and its expansive network of related entities. The law firm could be found to owe duties to an entity that the law firm did not expect—but might have been able to consider or negotiate earlier on.

It may be that the law firm feels the risks are manageable. Alternatively, the firm could attempt to negotiate additional terms.

Implementing the Guidelines

Once the law firm reviews and approves the outside counsel guidelines, it can be helpful for the firm to educate team members working on the matter about the specifics of the guidelines so that everyone can comply. This may be especially important when the guidelines deviate from standard firm or team practices.

Some guidelines may include specific requirements relating to billing or staffing. Failing to adhere to these requirements could create a risk of being short-paid or not being paid at all. For example, the guidelines might limit the number of attendees at a deposition or might require preapproval for interstate travel.

Failing to seek client permission for such events before they occur may make it harder to get costs reimbursed on the backend. But by training the team on these requirements, the firm can help avoid compliance issues down the road.