Originally Published in The Law Blog by Jennifer Smith | June 22, 2012
Ever devoted to extracting “value” from law firms, the Association of Corporate Counsel issued some shoutouts this week to a handful of business and law firms who came up with innovative ways to boost efficiency and cut legal spending.
Some of the 2012 “Value Champions” should come as no surprise to LBers who keep track of such things.
The list includes GlaxoSmithKline PLC and Pfizer Inc., two companies that had led the way in paring down their budgets through the use of alternative fee arrangements. The pharmaceutical industry has made particular strides in applying that kind of pricing to litigation, an area that some lawyers have long said is too unpredictable to assign set costs.
Also listed: Seyfarth Shaw LLP, the Chicago-headquartered law firm that has made a near-fetish of its aim to deliver efficient legal services. The firm teamed up with the law department at defense contractor Rockwell Collins Inc. to re-engineer how the company selects and manages its outside counsel.
Other winners included Home Depot Inc., which cut its legal spending in half over four years in part by using fixed-fee retainer programs, and Sherwin-Williams Co. The paint company used one firm, Cleveland-based Gallagher Sharp, to defend product-defect and warranty claims and provided the lawyers with intensive technical training, an approach that cut costs and improved outcomes. Tyco International Ltd. also made the cut for its “radical” collaboration with Shook, Hardy & Bacon LLP, another effort that revolved around using flat fees for litigation.
“By demonstrating creative lawyering and good old fashioned business sense, these ACC Value Champions not only controlled legal spend, but they also improved legal outcomes for their clients,” said ACC president and CEO Veta T. Richardson. (For those who thirst for such things, there’s more detail on all the winners here).
But not everybody is hopping on the bandwagon with such enthusiasm, particularly when it comes to alternative fees and litigation.
“The average company can’t seem to find an alternative fee strategy that works for them,” said Paul Mandell, a lawyer by training who founded the legal outsourcing firm Clutch Group LLC and now heads up Consero Group LLC, a company that coordinates events for general counsels and other executives.
Smaller companies just don’t see the constant flow of repetitive litigation that allows pharmaceutical companies and their lawyers to predict outcomes and set the appropriate fees, Mr. Mandell said. “If they’re under $5 billion in revenue, it’s hard for them.”