Client Q&A: Joni Lee Gaudes

Interview with Joni Lee Gaudes, Vice President, General Counsel & Co-Head of Internal Control

FCTI, Inc.

FCTI, Inc. is a leading nationwide ATM network and service provider. Since 1993, it has deployed customized ATM solutions to America’s largest financial institutions, travel centers and retailers. The Los Angeles-based company is owned by Seven Bank, LTD and operates in all 50 states. FCTI owns approximately 5,000 ATMs and operates another 2,000 merchant-owned ATMs.

Q: In your best relationships with outside counsel, what are three important things other lawyers could learn from them?

A: Know my business, be strategic and be fair in your billing. What I mean by that is the obvious: Don’t overbill, but also bill appropriately. The bill should demonstrate efficiency and that you are being smart in how you are working on our matters.

Q: And, of course, the follow-up: What are the top three things that lawyers could learn from your least successful relationships with outside counsel over the years?

A: The first is when law firms show they don’t know how to staff appropriately and do things like having multiple partners on matters. Another is not sending a three-page memo when I just need an answer. The third is don’t do work I didn’t ask for and don’t need.

When a lawyer leaves the firm, don’t replace him or her with a more expensive lawyer to finish my matters. If I was working with an of counsel and then a senior partner takes over, that is going to cost me more, but I am not going to get more value. The decision was already made that this was of counsel-level work. And even worse, don’t bill me for getting that replacement lawyer up to speed on my matter.

Q: How has purchasing legal services changed?

A: It is much more competitive, which is great for me! Firms are much more willing to be strategic and invest in the long-term relationship. I’ve had firms approach me with fee arrangements that are very attractive and that I know they are offering to be a loss leader.

Q: With all the highly qualified lawyers out there, what factors really influence your hiring decisions?

A: The specialty always matters. I think about how big the matter is and that determines the kind of firepower I am going to use. And my personal relationships play a big role in who I work with. As I have moved into different roles in different companies, I have gone back to one lawyer in particular who defines the perfect lawyer-client relationship.

Q: Competition is fierce among law firms; what have law firms done effectively to market to you that captured your attention?

A: The smaller and midsize firms are easier to work with in a lot of ways. It does go back to the personal relationships, too. One thing, though, is that firms have to understand that I am in it for the long haul, and they can’t just think of me as a monthly revenue source. I may not have been able to give firms work at the time I first met them, but they have been very diligent in maintaining the relationships, which have evolved into friendships. They know what interests me and my needs as well as how to remain relevant to me, my practice and my company. And then when the time is right, I use them.

Q: What law firm trends are you are seeing that you would like to come to a screeching halt?

A: I know it’s a business, but there is never notice about those rate increases. I never get rate increase letters, and it just shows up on the bill. I have negotiated a billing rate with a lawyer, and then in January a new rate kicks in. I’ve also negotiated a discount with a lawyer, and then the bill comes and the discount isn’t there because a new rate structure kicked in.

And don’t nitpick on fees. One of my international firms has even charged me a 2% currency conversion fee; the nitpicky fees aren’t real costs to you and jump out on a bill. That also shows you aren’t thinking about the long-term potential of the relationship. The ticky-tacky profit generating on things like Westlaw, Lexis and data hosting is all overhead, and the large firms don’t hesitate to bill for that without blinking an eye. The smaller, more nimble firms will tell you they will never bill for those kinds of charges. They are tech savvy and they demonstrate how they know their clients’ needs.

Q: What is your greatest challenge as in-house counsel?

A: I work with a bunch of different business departments, so it’s juggling the priorities of each of them.

Q: Lawyers are often worried that seeking client feedback, ascertaining the client’s preferences or learning more about the business will be viewed by the client as an imposition. How would you respond to that concern?

A: I don’t think it’s an imposition. If they approach me at the beginning of a relationship with a message around how they want to make me happy and how to make me look good in front of my management team and board, I will always have that conversation. It can be 30 minutes or an hour over lunch like that. A lot of the time lawyers don’t like talking about those kinds of things, or fees, and they can get really weird about it.

Q: Any other advice you would like to give law firms?

A: Other than know the business, I would say to retain and maintain your clients and make that effort to get to know them so it is more than just a business transaction. My best outside counsel is a huge supporter of mine, and I wouldn’t hesitate to refer him to other potential clients.