In construction and engineering, a good legal team is often seen as either a luxury or an afterthought. Some firms are willing to pass legal work to outside counsel while others are content to let legal matters slide until they become unavoidable problems. Neither view is sustainable, though—especially for a company with a bold vision.
Burns and Roe, an ENR Top 500 design firm, is one such company. The engineering, construction, and operations firm, well known for its broad suite of electric-generation projects, has aspirations of growing its global profile. It’s a goal that requires an exceptional legal team. And, as senior vice president and general counsel, Andrew Ratzkin isn’t merely negotiating contracts and performing traditional services; he’s adding value by finding innovative ways to slash budgets, avoid disputes, and open up new revenue streams.
Ratzkin, a native New Yorker, came up as an environmental lawyer working primarily in the energy, electric, and manufacturing sectors. After years of building experience in permitting and licensing, he went in-house at GE Energy and became their environmental counsel. In 2007, he joined Burns and Roe. “When I came to this firm, we were spending a large sum on outside counsel,” he recalls. “That was one of the things I wanted to change.” Ratzkin says working with outside attorneys can be essential, but his company was using its outside-counsel budget on things a good legal team should do internally. “A solid legal team needs to handle its own contractual matters and not rely on others for issues that come up all the time and are closely aligned to the business,” he says.
Ratzkin brought that work in-house as a matter of principle, then imposed a rubric on the outside firms that enabled them to work more efficiently. “I’ve worked in a firm, and I know that their institutional imperatives are not the same as our business objectives,” Ratzkin says. “We don’t need a firm that has only a desire to bill hours and cover its flank. We need a firm that has expertise that our legal team doesn’t have.”
He centralized the authority to engage outside legal services, something that had previously been spread across various functions. He placed a monthly ceiling on billables. He required prior approval for the preparation of formal legal memoranda and internal research memos, placed limits on lawyer-to-lawyer meetings, imposed controls on out-of-pocket expenses, and front-loaded work on make-or-break issues. These steps, molded in part after GE’s outside-counsel-management policy, shifted burdens from outside counsel to Burns and Roe’s internal legal function. “An internal team needs to be responsible for the critical matters close to the business,” Ratzkin says.
And, the results speak volumes: his strategies have cut Burns and Roe’s outside legal spending by more than 50 percent.
Another philosophy fundamental to Ratzkin’s approach is to dig deep into all legal matters and confront problems before disputes explode. Some legal teams litigate too quickly, and others are too hesitant. Ratzkin prefers to try all angles. “Sometimes there’s an intersection of parties’ interests, and sometimes there’s not, … but we never move forward without seeking to identify
a resolution that’s in the interest of both sides,” he explains.
A few years ago, Ratzkin and his colleagues found themselves embroiled in an extended dispute that seemed headed for the courtroom. A rational resolution looked unlikely, and the opposing company’s outside counsel had rejected many proposals from Burns and Roe. Ratzkin used his position as in-house counsel and arranged a series of calls with his counterpart at the other (much larger) company and discussed the matter in depth. After the calls, the other company essentially walked away, no longer even interested in the settlement that had been on the table. Ratzkin demonstrated that the other company’s outside counsel was simply racking up billable hours, keeping the firm on the hook for costly and unwise litigation. “Conflicts are sometimes fed by ancillary motives or driven by poor understandings and not by true business interests,” Ratzkin says. He strives to uncover these issues before heading to trial or allowing his company to be dragged into one.
In addition to helping the bottom line and avoiding litigation, Ratzkin has helped Burns and Roe tap new revenue streams. When a client sought access to know-how related to the firm’s engineering services, he encouraged management to seek satisfactory compensation. Burns and Roe was able to collect a significant royalty on the company’s unpatented internal IP. Then Ratzkin redrafted contracts to ensure the company didn’t forfeit the right to use similar strategies in future deals.
A good general counsel needs to “make decisions at the pace of business” and do more than reflexively naysay risk. As Ratzkin has demonstrated, a valuable legal team will address risk, help shape scope, save money, find new revenue, and enable a company to move forward with its intended activities. It requires a shift beyond the legal mind accustomed to working at a large firm. “A general counsel has a whole different way of working,” Ratzkin says. “We’re part of the decision-making process for a business. And that’s what makes it so exciting.”
