Changes in law firm hiring and pay structures could help more veterans enter the industry and make firms more attractive to in-house clients like SAP National Security Services, according to general counsel Joseph Moreno.
“What you get is some very, very talented lawyers come out of the Army or the other branches, having done some fantastic legal work in the courtroom, on the battlefield,” Moreno, a current member of the U.S. Army Reserves, said. However, he doesn’t see these lawyers fitting easily into firms’ “very parochial” hiring systems.
“You don’t know whether to hire them as a first-year or a fifth-year or an eighth-year or a counsel or partner. I think some of the larger firms are missing out on some fantastic lawyers because of that,” he said.
Bloomberg Law is conducting a Q&A series highlighting some of the legal industry’s most important relationships: the often fruitful but sometimes complicated connections between general counsel and their outside law firms. We’re talking with general counsel across industries about how they select outside lawyers and handle issues like billing, fees, and tracking performance.
SAP NS2 is a subsidiary of SAP SE, an international enterprise software corporation based in Germany. The Virginia-based company offers security solutions for corporate clients and government contractors. Moreno joined SAP NS2 in May after nearly five years as a partner at Cadwalader, Wickersham & Taft. He has worked for the Justice Department and Federal Bureau of Investigation.
He spoke with Bloomberg Law about looking beyond big East Coast law firms and the importance of making the legal industry friendlier to veterans.
This conversation has been edited for clarity and length.
Bloomberg Law: What’s one of the most important considerations when it comes to picking outside firms?
Joseph Moreno: I’m sure every GC cites cost as a top concern, and I am no different. While there are times the magnitude and complexity of a case may mean a top tier firm is warranted, the fact is I can usually find the expertise and bench I need at a regional or boutique firm at a savings of one third or more.
The typical large, East Coast, New York, D.C. firms have tremendous people and a lot to offer, but there are plenty of smaller or firms or even boutiques that have incredibly talented people. A lot of them are former large firm associates, or even partners, who—for whatever reason, whether its geography, or quality of life, or smaller, mid-market clientele—wanted a place that gave them more flexibility in terms of rates and perhaps fewer conflicts. Far from finding that a turnoff, I see it as a gutsy move by the type of risk-taker I want to do business with.
BL: How do you decide when you staff a regional, smaller firm versus a larger, national one?
JM: Some of this is you trust the relationships. There are people that I’ve known for years, and that I have a certain comfort factor with, and that know the company really, really well. There are certainly times when it is worth paying that premium for those names. There are some cases, whether it’s litigation or on a corporate transactional side, where there is an inherent value in the market name of the firm. If you’re dealing with a Wall Street type of transaction, you might want a Wall Street firm, in terms of who represents the counter parties. I just think it’s becoming more and more common that people are saying there are times when we don’t necessarily need to pay that premium because you can get the same quality at a firm that’s perhaps less well known on the East Coast, but delivers the same level of legal support.
BL: Do you often use alternative fee arrangements, or is it usually hourly?
JM: Usually still hourly. I do look for opportunities, as I did when I was a partner at Cadwalader. Now that I’m on the other side, I realize that many transactions, particularly litigation, don’t really lend themselves to flat fee arrangements. I do think that when you have a matter where you can quantify it ahead of time, perhaps a repeat series deal, both parties can actually benefit quite a bit from having that issue of cost largely settled upfront so it doesn’t become an issue down the road.
And I understand that some companies have been very aggressive and not wanting to pay any hourly attorneys. We’re not there yet. But I do think that the trend is going to continue as companies large and small are looking for ways to spend their money more wisely.
BL: What other characteristics do you look for in outside counsel?
JM: I am drawn to outside firms that show a similar commitment to recruiting, mentoring, and developing military veterans and other diverse attorneys.
It’s something that large firms struggle with. On the one hand, it’s relatively simple to hire, let’s say, a West Point or Annapolis graduate, who comes out, serves, and then goes to law school, and then he or she is ready to start as a first-year associate. That’s pretty simple, and that’s a nice “check-the-box” to say you’ve hired a veteran. It’s a lot more difficult for firms to grapple with the hiring of those who have practiced law in the military and that are looking to transition.
What you get is some very, very talented lawyers come out of the Army or the other branches, having done some fantastic legal work in the courtroom, on the battlefield, doing operational law, international law, administrative law, environmental, and yet they don’t fit neatly into the law firm associate structure. And you don’t know whether to hire them as a first-year or a fifth-year or an eighth-year or a counsel or partner. I think some of the larger firms are missing out on some fantastic lawyers because of that.
BL: How can firms and legal departments do a better job of getting veteran lawyers into the private sector?
JM: The more flexible AmLaw 200—or regional, or boutique firms—that are willing to take a chance on those who have military legal experience, they realize how much value those lawyers can bring. I think it’s being a little more open-minded about their hiring practices when it comes to veteran attorneys.
If you get away from the very parochial hiring structure, and you’re a little more open to someone who has less traditional, but extremely valuable experience, and if you have more flexibility in terms of compensation, it will be easier to figure out where that person could fit in a law firm structure. I don’t mean pay them less. I just mean that if you’re not so focused on what year and then what comp that person has to get for being that year, but instead could look at a candidate on a case-by-case basis, I think you could see a lot more talents that’s currently being underutilized.
BL: Why is it important to get more veterans into the industry?
It’s sort of circular. If young professionals, whether they’re lawyers or any other kind of professional, who are contemplating military service feel they’re going to have a hard time having a career after their service, I think it will be harder to recruit them in the first place. That goes for professionals in general. I think that you’ve had a lot of young, professional people who have not considered military service over the last few decades because they’re afraid that that time could better be spent starting a civilian career. If they know that companies like major law firms, big fours like Deloitte, a company like Accenture, are out there looking for folks like them with a military background, I think you’ll get better recruits on the front end. That should be part of a longer process that’ll make both the military and the private sector stronger over time.
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