The Quest for Knowledge Drives In-House Counsels
By Paul Spiers

For some gaming companies-operators and manufacturers alike-the question of bringing counsel in-house isn't so much about "if," as it is about "how soon?"

And for lawyers who have made the leap from private firm to gaming company, the question isn't so much about "What will I do," as it is about "What can I learn?"

In-House Structure
It is the seemingly endless quest for knowledge that drives these counsels. For this story, Casino Lawyer spoke with six in-house counsels about the efficiencies an in-house counsel may bring to an organization, and their take on the notion of their role as "a necessary evil."

"It does not make sense to me to have the lawyers in a remote location. They need to be there working as part of management," Gary Jacobs, executive vice president and general counsel, MGM MIRAGE, said, bluntly framing the discussion around the need for in-house counsel. "It is important to have a general counsel as a significant member of the management team; [one that is] intimately involved in decision-making and available as a resource."

Kim Sinatra, senior vice president and general counsel for Wynn Resorts, Ltd, whose in-house legal department stretches from Las Vegas to Macau, said: "Having in-house counsel is essential because legal issues arise every day. If you have a lawyer in-house, whom you like, you're more likely to ask for advice and head off problems early on; whereas outside counsel usually is called at disaster time."

Like Sinatra, Jacobs oversees what he describes as a mini law firm of 17 lawyers scattered about Las Vegas and other parts of the country. "Each of the properties [within the MGM MIRAGE corporation], has a separate lawyer with a direct line to that property's president, and a dotted line to me."

It is an arrangement that seems to work well for Jacobs, his team, and the corporation in general, because of the strength of the team, their inner workings, and the deep involvement each has with his or her own property. "We have a monthly meeting where we discuss areas of common interest, and we also try to isolate people who have specific skills, such as intellectual property."

Sinatra expressed a similar thought: "One of the cool things about the lawyers at Wynn is that we all do everything beyond the walls of our office. For example, I have a lot of entertainment experience, so when those issues arise, people come to me."

Mark Lerner, senior vice president and general counsel for Bally Technologies, has seen it all as a lawyer in Nevada, first as a deputy attorney in the gaming division where he served the Nevada State Gaming Commission during what could easily be described as a rocky period in gaming history-1983-1987-and for him, making the leap from private practice was an easy decision. "Somebody offered me a job and I found it interesting."

Sounds simple enough.

In-House Knowledge
"I wanted to learn more about the business from the inside and get a different point of view," Lerner said.

This quest for knowledge and for learning the bigger picture seems a driving force behind each of these six lawyers. "As an in-house counsel, I have spent much time in Singapore and Macau, and I find it fascinating. I have been stretched personally and professionally. I know how to do business with Americans; I've been doing that my whole life. But now I have to get things done halfway around the world, and that makes me want to continue to learn," Sinatra said.

"I had the feeling that as an in-house lawyer the legal advice I would be giving would be in a more practical context," Jerry Smith, senior vice president and general counsel, Shuffle Master, said.

Senior Vice President and General Counsel for Wynn Las Vegas, Kevin Tourek, who first made the leap from a firm to in-house counsel while working in the airline industry, had a similar perspective: "When I was working as an outside lawyer for America West, I was doing anything that came along-buying and selling aircraft, and the like. After a couple of years, I became so integrated with the company, I was able to see the bigger picture. I was a pseudo in-house counsel because I was working so closely with them."

Marc Rubinstein, general counsel for the soon-to-open Cosmopolitan, acknowledges one must do anything that comes along, as he describes his daily life. "It's like triage," he jokes. "Part of what makes the job fun also makes it frustrating, because you get so many things thrown at you in the course of the day."

It is that wide range of daily responsibilities that keeps each of our in-house lawyers close to their outside counsels. "We are a great consumer of outside law firms," Jacobs said with a smile.

Smith said: "As general counsels, we are exactly that, generalists. When we have very specific details or securities issues, we use outside counsels or intellectual property counsels. Part of my job is to determine when we should bring in outside counsels and how to quarterback their work."

Jacobs said: "What one tries to do is find the best lawyers for the particular job. It is not really the firm that matters, it is the particular lawyer who knows your company and knows your needs."

Lerner echoed that sentiment because of the large number of jurisdictions in which his company operates: "At Bally, we have 30 or 40 outside firms that we use for various things in various jurisdictions. You really need both [inside and outside counsels], because outside counsels do not always understand the reason why questions are asked and do not appreciate the ramifications of what happens in one jurisdiction may affect another jurisdiction."

In-House Benefits
While they each maintain good relationships with their outside firms, each mentioned the benefits an in-house counsel brings to the gaming company. "I love getting to see what I do and having to live it every day," Sinatra said. "It is different when you have to live with the people your advice effects every day."

"You avoid things getting lost in translation," Rubinstein said. "Outside lawyers deal with abstract concepts because they do not live with the client every day and do not see the inter-connectivity of issues."

Lerner agreed. "Very often one single issue has tendrils that reach out into many parts of the organization that someone outside may not appreciate."

Rubinstein gave an example. "You can be working on a contract and because you do not work in-house, you do not know that there is another contract in another part of the building that makes you unable to do something in the contract."

Tourek gave a similar example. "As an in-house counsel, you have a better idea of all other areas that may be impacted by decisions. We had an outlet that was going to enter into a contract with Company A, and then two days later, we had another outlet also wanting to enter into a separate contract with Company A. We were able to negotiate better terms because I was aware of both outlets and their separate contracts, and that might not have happened with outside counsel."

For Smith, it is a matter of practicality: "When you are in-house, you are involved in helping figure out a way to allow the business to do what it wants to do in the least risky manner or with the least amount of acceptable risk. You are involved in the business aspects and the legal aspects, as opposed to an outside attorney, where you are focused very narrowly on giving legal advice. I can give legal advice in a more practical context."

However, the group differed on whether or not in-house counsel inherently brings efficiencies.

"It is going to depend on if there are enough situations that occur with enough regularity, if you would want to retain counsel. If things are episodic, you would want to be able to pick the lawyer best for the situation," Jacobs said.

"It depends on what we are talking about. For litigation, we exclusively use outside counsel because it requires a critical mass of people and resources to do litigation, and do it well. You need people who specialize in discovery, and that is just not effective in-house," Lerner said.

Tourek was more definitive: "I do not think there are any efficiencies. Some companies think they will save on legal bills, but the fact of the matter is, you are not going to immediately reduce your legal bills by $100,000. But, for better or worse, in-house counsels can identify situations the company did not even know were wrong. Overall, the company is better protected with in-house counsel."

Smith said: "There are absolutely efficiencies to having in-house counsel. As an in-house lawyer, you know the business, the business people, and the risks and rewards better; you can get information more directly. All of that makes a more efficient attorney."

The Insider Difference
And what exactly is the insider difference?

"People think you only have one client, but that is really misleading, as each resort is a city unto itself," Rubinstein said.

Lerner expanded on that point: "In private practice you have more control over your time because when you are in-house, you have hundreds of clients outside your door who can and do contact you at anytime."

Time was also a factor for Tourek: "The hours are definitely not less. The major benefit: I do not have to do timesheets. I get to prioritize things a bit easier-outside I would do things first in/first out; here I get a better understanding of what needs to be done today, tomorrow, or next week."

Jacobs said, "One of the big adjustments for me was to have to act like a client, and for the lawyers I know, they had to treat me like a client."

So which is better, working outside or in-house?

"It depends on the house," Jacobs joked. "I have a remarkable position because I am in senior management, and most of what I do is not 'lawyering.' Instead, it is various management functions, such as risk management, security, and our diversity initiative."

Lerner said: "In private practice you can fire your client. Working for your only client creates different issues. Fortunately, I enjoy my job and the people I work with."

"One of the reasons I am in-house is I wanted to be a part of the whole operation, the whole team. And the benefit to that is I meet people I would not normally meet, and they develop a comfort level in dealing with me. Eventually I was able to get beyond their referring to me as, 'Oh, that's the lawyer,' when they began seeing me as someone with insights and skills that can really benefit the company," Tourek said.

That team sentiment was shared by Tourek's Wynn colleague: "I can look around every day and say, 'This is something that I helped create.' Because I'm in-house, I am surrounded by people who are a part of the same thing that I am," Sinatra said.

"I think that, by and large, if the company can afford it, and if the company is involved in transactions, it is better for a company to have an in-house lawyer because he or she will know the company better than an out-of-house counsel, and that will allow him or her to work more efficiently," Smith said.

Lerner said: "Often, lawyers in private practice ask me, 'Which you do like better?' And the answer is I don't know. There are differences in private practice. You spend your day working with other lawyers where the business is law. In-house, although we have a bit of a small internal firm, most of the people we interact with on a daily basis are not lawyers, so there is more of a variety. And I think when you are in-house you have to spend more time questioning yourself because there is always a chorus of voices questioning you. There is more need for self-reflection."

And what do you say to those in-house who call you a necessary evil?

"You haven't worked with me," Rubinstein said. "I bring more to the table than just understanding a regulatory environment. I have been with leading companies in business, so I understand the business from an operations, development, and capital-expenditure perspective because I have been in those meetings every day, learning and seeing the interconnectivity."

Smith said: "There's always some degree of kidding and joking and sarcasm. But I think the chief executive officer and board of our company respect the role that lawyers have and that I have, and that my job is not to prevent the business from moving on; it is to make our business people make business happen in the most efficient and less risky way we can."

Sinatra said: "Our job is not to be the cops and the 'no' people. We know the regulatory environment and the legal environment, and if you say, 'This is where I want to go,'we can help you get there."