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Does Your Government Contracts Matter Need a Second Look?

October 2, 2014

Corporate counsel facing costly or significant government contracts investigations, disclosures, claims, litigation or transactions matters are increasingly in a difficult situation.  Their budgets are squeezed, in house manpower is at a bare minimum and, at least in the government contracts and grants field, regulators are moving toward a “one strike and you’re out” policy with their enforcement efforts.  The pressure to “get it right” is intense.

“Getting it right” encompasses so much more than overseeing first rate legal work.  “Getting it right” includes developing strategy for customer and regulator engagement and, in the context of investigations and disclosures, navigating the minefield of parallel proceedings by multiple regulators with differing goals and priorities.  Missteps can cost the company dearly.  Boards of Directors are also increasingly active in setting strategy and senior executives want common-sense focus on business solutions as well as legal risks.

Cost control also matters.  Rates for “BigLaw” attorneys continue to rise, with associates a few years out of school carrying rates in excess of $600 per hour, partners can be more than $1,000 per hour.  Meanwhile, margins are tight as the government squeezes all it can out of its suppliers and each additional legal dollar can impact overhead and future competitiveness.  And for companies with insurance benefits, carriers more and more commonly carry pre-approved rosters of attorneys ill-suited to the specific issues that are most likely to generate six- and seven-figure legal engagements.

When we ask General Counsels what keeps them up at night, we frequently hear that selecting and maintaining consensus on the right strategy, retaining the “right team” for highly important matters, and not breaking the bank even if a matter is “bet the company big” is one of their larger challenges.  It is precisely this concern that opens up new markets for mid-size firms with out-sized capabilities.  Where much of “Biglaw” is focused on landing bet-the-company litigation or investigations, niche teams are developing to help General Counsels achieve difficult consensus, maintain Board of Directors support, and even push back on insurance carriers when they begin to question costs.

General Counsels tell us they value the ability to confer on strategy, under the cloak of privilege, with lawyers who have focused expertise as a regulator similar to the ones they are dealing with, as a global business unit general counsel for a major contractor, with former prosecutors and/or Department of Justice claims litigators.  More often than not, the added, and independent, assessment of strategy and approach re-aligns internal stakeholders, provides an opportunity to make informed tweaks to matter strategy and streamline processes, and provides additional assurance that this is nothing else that can — or more importantly, should — be done to protect or position the enterprise.

For example, recently we have assisted several large companies by assessing the results of various internal investigations and providing “Second Looks” at the strategy for communicating the results of the investigation to the Government.  Given the potential for suspension and debarment, not to mention Civil False Claims Act liability, arising from many investigations, these Second Looks helped ensure all government stakeholder needs were addressed (e.g., Inspector General, Contracting Officer, Suspending and Debarring Official, Defense Security Service, Program Manager, and others) while protecting the companies.

In the coming years we believe General Counsels will increasingly ask for a Second Look from mid size law firms, especially in legal matters with six-figure monthly legal bills (or larger). 

Do you need a Second Look?  Shulman Rogers would be happy to help.  Contact David Robbins