How to coordinate with external

lawyers, law firms and internal

business teams as an in-house
counsel
How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

Approximate reading time: 12 minutes

Learning objectives:
This chapter will guide you:

1. In understanding the different types of external and internal communication which

you are likely come across during the course of your work;
2. In ensuring that the common pitfalls in the different types of communication are
avoided; and
3. In being able to ensure clarity and to ensure that the proper process in relation to
the communication is followed.

If you are working in the in-house legal department of a bank or an NBFC, you will be
required to draft various external and internal communications on a daily basis. Any official
communication needs to be clear (unambiguous), appropriate in length (neither verbose
nor too short to miss out essential details), communicated through the correct medium and
addressed to the correct recipient(s). In this chapter we will discuss the common types of
external and internal communication you are likely to encounter, how to go about it and
the common pitfalls.

External communication
External communication means communication to people outside the organisation. You
can be required to communicate with the following people outside the organisation:

1) External counsels - lawyers / consultants;

2) Regulators

Communication with external counsels

External counsels or lawyers are likely to be engaged by your organisation for performing
specific tasks. Generally, there will be one point of contact designated for dealing with
external counsels so that there is no multiplicity of instructions given to them.

1) Steps in communication with external counsel

Following are the steps to be followed for communication with an external counsel:

a) At the point of time when a quote is requested from the counsel, the details
of the customer or client involved in the matter will not be provided. This is
because banks or NBFCs are recipients of a significant amount of customer
information which needs to be handled with care. Since in the given situation
it is possible that ultimately, the lawyer may not be engaged, they will only be

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

informed about the situation and case and they will not be informed about
the name and other details of the customer. In order to receive the quote as
soon as possible, usually, the request will be made by e-mail.
b) The actions proposed to be taken can be discussed with the external counsel
over a call and even at this stage the customer’s details will not be provided.
c) The bank / NBFC is likely to make the request for a quote generally from
more than one lawyers / law firms, in order to be able to compare.
d) Once the quote is received from such lawyers / law firms, the legal
department will review these and usually, the lowest / most competitive
quote will be selected. However, there may be more factors for selection in
addition to the cost. For example, past experience plays almost as large a role
as compared to cost.

2) The scope of work must be absolutely clear

It is essential that the scope of work to be handled by the external counsel / lawyer
is clearly understood by you and is clearly communicated to the counsel / lawyer. If
changes have to be made later on to the scope and the counsel is unwilling to
provide the services, the process of searching for another appropriate counsel to
handle the work may not only delay, but also result in additional cost. It is also
recommended not to include catch all language such as “to deal with any other
questions” in the scope of work.

For understanding the scope clearly, it is essential that you understand the work
involved very clearly, since sometimes, there can be ancillary questions involved. For
example, where the question is for carrying out the appropriate KYC processes with
regards to a customer (i.e. advice is sought on what extent of KYC processes need to
be carried out for a particular customer in terms of applicable guidelines), there will
be ancillary questions involved such as how will the customer data be stored and
where, for how long should it be retained and when should it be deleted. It is
essential that you think through the issue completely, identify and write all such
questions involved and deal with these in your communication with the external
counsel. Therefore, in your query to the counsel, you should cover the ancillary
questions involved as well. Do not think: ‘Isn’t this obvious’, ‘Isn’t it the job of the
counsel to address the question’, ‘What is the counsel being remunerated for, if not
to think on his or her own feet’, etc.

3) The charges and costs should be understood and communicated clearly

Often external counsels / lawyers can confirm the assignment subject to limitations
about the scope of the work or limitations or restrictions on time to be provided (i.e.
not exceeding certain hours) or number of times they will attend calls or meetings
(i.e. not exceeding two meetings), or number of times a document is reviewed, etc.
Often, issues creep up because the counsel’s scope of service is exceeded, but the
bank / NBFC does not get the service required, and it cannot apportion responsibility
on the counsel, because the counsel performed his or her job as per the proposal.

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

Therefore, merely because the fees are within the budget does not guarantee that
the work will get done satisfactorily. The bank’s internal team will need to assess
whether these limitations will ensure that the concern of the bank is satisfactorily
addressed. The fees will therefore also be subject to the specific restrictions and any
work beyond those restrictions will result in additional cost.

When dealing with external lawyers, instead of focussing simply on the

fact that the confirmation has been received, you need to read the
confirmation provided by the counsel very clearly and understand the
fine print as to whether the fees are connected with certain limitations
in the scope of work. The restrictions on the scope need to be
understood and such restrictions on the scope of work should be
discussed by the internal team, together with the amount of the fees.

4) The email should be structured properly

Ensure that the communication to the counsel is structured properly i.e. that it
includes a proper address, body and a proper signature including your name and
your contact details where necessary. Emails in large organisations usually bear the
confidentiality restrictions / notices. Ensure that all relevant people have been
copied on the emails and that they were copied on the prior communication also
which was sent to the external counsel. However, it is necessary to ensure that no
internal communication i.e. comments within the department are forwarded to the
external counsel. Do not send a long chain of trail mails. If you need to include any
information from trail mails, extract it and include it specifically in your email.

Communication with the external counsels can also involve the bank / NBFC responding to
legal notices received from counsels / lawyers of counterparties. In most cases, such replies
will refute all allegations, will include the factual background and clarifications, request for
further information from the concerned party and state that the non addressing of any
allegations in the letter will not be considered an admission of the same.

Common pitfalls in communication with external counsels

1) Not understanding or communicating the scope of work / charges indicated by the
counsel clearly

As discussed, this can result in a mismatch in the work actually required to be

completed and work agreed to be completed by the counsel, leaving some part of
the work undone. Having to get the remaining work completed by another counsel

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

or adding to the scope of the work at a later time may result in an increase in the
costs.
2) Not relaying the communication from the counsel back to your senior clearly and
completely

If you are not the decision making authority in this regard, you must inform your
senior clearly and completely about the communication received from the counsel.
Alternatively, if you are getting your reportee to secure a quote from an external
lawyer, you must ask them to communicate it back to you clearly. If this is not done,
it can result in creating a false sense of completion where you / your senior believes
that the work has been properly assigned while this is not the case in reality. The
restrictions communicated by the external counsel need to be communicated clearly
as well so that a decision can be taken right at the beginning whether to look for
another counsel or to proceed with the possibility of additional costs at a later stage.

3) Using the ‘Reply All’ and ‘CC’ buttons without due consideration or forwarding
internal comments

This is the proverbial banana skin of email communications. You must be very
careful about whom your email is addressed to. If you need a specific person to act
on the email, that person should be marked within the ‘to’ field instead of the ‘CC’
field. Also, be conscious about who is marked CC on an email and whether it needs
to go to them. Often, people do not copy everyone marked on the transaction, and
this can create delays and unworkability. You must not recklessly omit email ids of
people, as the other side may have involved its employees or consultants. Similarly,
be careful while clicking the ‘Reply All’ button for the emails since it may not be
necessary for everyone to know the back and forth in communication with a specific
person. Though in cases where everyone involved needs to know the updates, it is
essential to click ‘Reply All’.

Communication with regulators

An important part of replying to regulators will involve analyzing the intent behind the
regulatory notice. It will also involve discussion and decision on the stand that the
organisation is to take.

Following points need to be taken care of as regards communication with regulators:

1) Request for enough information from the relevant business team

Notices from the regulator will be received usually on account of something that has
happened in terms of a specific business and therefore, a specific team within the
organisation will be involved. For example, where there is a question in relation to
the due diligence being conducted on a borrower, it is the due diligence department
that will be involved. Therefore adequate information must be sought in relation to

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

the notice from the appropriate business department as to the facts of what had
happened, why decisions were taken as they were, etc.

2) The response has to be factually correct and comprehensive

There is no scope for factual errors or omission of details in any

communication with the regulators. For this purpose, it is essential
that all the relevant facts be obtained clearly and adequately from the
relevant business department. Many organisations will have a draft
of the response to the statutory / regulatory notice, which should be
followed to ensure that you do not miss out on any essential parts or
information which should be included in the response.
In most cases where the notice relates to the contention of the regulator that there
has been non-compliance, the response will indicate the factual scenario and also
inform all the steps taken by the bank / NBFC to ensure such compliance. All the
relevant documentation / submissions will be attached to the response. The
response can also include the confirmation of deposit of financial disincentive if any,
and may involve making appropriate prayers for treating the submissions and steps
as sufficient compliance.

3) Ensure that the relevant business teams also signs off on the response

Before a response is treated as final, it is essential to ensure that the relevant

internal teams have reviewed and signed off on the communication. For example, if
a response is being sent to the Reserve Bank of India, it is essential that in addition
to legal, the compliance department has also reviewed it.

4) Ensure that the response is comprehensive

You must understand the notice from the regulator clearly to know what facts /
documents / background / prayer can be included in the response, so that the
response is comprehensive and does not leave out essential facts. The more
groundwork you do before you arrive at a final draft, the better and more
comprehensive the response will be drafted.

Common pitfalls in communication with regulators:

1) Not understanding the exact situation and not asking enough questions of business
teams

Since all detailed information is to be received from the relevant business

department, it is important that where the details are not clear, you communicate
this to the business team and secure a comprehensive understanding of the facts

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

before you begin to draft the response. If this is not done, the communication will
not be comprehensive and will not include all facts as may be required.

2) Not applying mind to the problem and relying too heavily on business teams

Often, it may not be possible for the business teams to fully appreciate the legal
aspects involved and therefore, it is upon you to apply your mind clearly to the
notice received, consider the facts and circumstances of the case and arrive at a
stand about the response. If you rely too heavily on the business team, it might
result in an inadequate analysis, therefore, making the response not
comprehensive.

Internal communication
Internal communication is with teams within the organisation. In large banks / NBFCs, you
will mainly be required to communicate with the relevant business teams and your own
team members.

Communication with Business teams

Legal departments are usually approached by the business teams for the review of a
product / transaction or documentation to enter into the transaction. The interaction will
be:

1) At the time of entering into a transaction, for example, a loan; and

2) After the loan has been advanced, if any specific issue / problem or difficulty arises.

For a bank, financial transactions such as loans, issue of cards etc. can be called a ‘product’.

Prior to entering into a transaction, the legal department will usually review such
transactions to analyse:

- the legal requirements which can apply;

- the restrictions in terms of law within which the product / transaction is supposed to
operate; and
- the legal risks to which the organisation could be exposed as well as what could
mitigate those risks.

Following are the steps which you will be required to follow for this purpose:

1) Understand the product / transaction and the terms clearly

You will be expected to reach out to the business department and understand the
terms and conditions of the product / transaction and its features very clearly.

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

Where there is any lack of clarity, you are encouraged to ask questions
to the business department and understand how the product /
transaction is supposed to function, end to end. You must first check
whether the answers from the business department are comprehensive
so that there are no assumptions and all aspects are thoroughly
clarified.

Sometimes, it is possible that the relevant business department asks you to include
features which you may know are not enforceable, in which case, you may
communicate this to the business department. For example, the business
department can ask you to include a covenant in a lending document which results
in creating an obligation for the borrower after the occurrence of an Event of Default
or after the repayment of money. Even if such a clause is included, it is unlikely to be
enforceable, therefore, you must communicate your observations to the relevant
business department very clearly.

2) Check what legislations apply, what are the restrictions and legal risks involved

You will have to analyse the transaction and form your own independent view of a
legal vetting of the transaction. You must therefore be able to understand and
analyse what laws will be applicable to a specific transaction and what will be the
legal risks which you need to highlight and what could be the mitigants that could be
applied to such risks. Make a considered analysis of this kind after gaining a
thorough understanding of the product from the business departments. For
instance where the product involves a conversion clause from debt to equity or
where it involves the appointment of a nominee director, it is necessary to
understand the applicability of legal provisions and the risks involved.

Common pitfalls to be avoided

1) Not gaining a clear understanding of the product

If all the features of the transaction and the end to end process involved in the
transaction is not understood clearly, the legal analysis will not be properly applied
and this will result in an incorrect determination or interpretation. One of the ways
to gain a complete understanding of the functioning is to think about the product
like a customer. You will need to distance yourself from the situation and think like a
third party to whom the product is being pitched. What are the concerns and
questions you would have as a potential customer, who does not know about the

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

functioning and procedures of the bank, and who may not at first instance be willing
to trust someone easily with a new offering?

2) Not asking questions

If you hesitate to ask questions directly to the business department involved it will
delay a proper analysis and result in a delay in the communication about the results
of the vetting to the concerned business department. You should therefore, not
hesitate to ask enough questions till you get a complete understanding of how the
product works.

3) Not expressing your understanding about the transaction clearly in writing

Not only should you have a clear understanding about the transaction and its
features, you should express the understanding in clear and concise language at the
time of writing down your analysis of the product. If you do not do this, it is possible
that the relevant business department will not understand the vetting clearly, and
will not have a clear view about the risks or mitigants which you have highlighted. As
a general rule, avoid being verbose and adding extra sentences. Be clear and direct
in your communication. What you write should be understood by operational
financial or tech people who are not exposed to legal jargon. Even the questions
which you put across to the business departments should be understandable by the
members of that department for them to provide you with the correct responses.

Communication with other members in the legal department

It must be clear to you how the decisions are taken within your team. If you need to involve
your seniors (for the purpose of action) or juniors (for the purpose of training / information
/ action), you must follow that process. BFSI entities usually have very clearly laid down
processes and decision making levels for any specific legal requirement and therefore
those processes must be adhered to.

Recap:
1) Your external communications can be with external lawyers / consultants. You may
also be required to vet responses to be sent to regulators by the business teams.

2) Internal communications can consist of vetting the terms and conditions of a new
product and discussing it internally with your team.

3) Communication should be clearly understood and clearly expressed, keeping the

recipient in mind. Ask questions where understanding is not clear.

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How to coordinate with external lawyers, law firms and internal
business teams as an in-house counsel

4) Follow templates where these are available to help you structure your
communication.

5) Finally, apply your own mind and analysis to all communication.

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