GE Brings Good Firms to Life
March 23, 2007 | Filed Under Legal Resources, Managing
Corporate Counsel details the latest eco-magination from GE on how it selects the roster of outside counsel it will use in its worldwide operations.
Under the so-called “Gen Two” regime, GE has backed away from such decision tools that it has used in Gen One (lilke a 20 page RFP and online auctions) to a shorter online RFP (saves paper!). This resulted in the herd of “preferred provider firms” being thinned from 140 to 108.
Other attributes of the new deal:
In addition to the changing lineup, GE also restructured the actual terms of the working arrangements. Under Gen Two, the firms must now propose alternative fee arrangements for every matter and offer a binding core team of attorneys to work on GE cases. The two-year contracts of Gen One were stretched to four years, and firms must renegotiate discounted rates halfway through the agreement.
Interestingly, one way the reductions apparently started was in the short-list of firms to get a Gen Two RFP. Those firms “that in-house lawyers gave the lowest ratings” to apparently didn’t get a password to the RFP site.
So the first lesson for law firms: don’t just be nice to the GC or managing counsel. That new staff attorney may have a long memory.
Linde Pays the (DLA) Piper
March 1, 2007 | Filed Under New Services, Legal Resources
Firms that aren’t talking with their clients about ways they can improve service have another reason to wake up and smell the coffee.
Just a few weeks after a similar deal between Tyco and Eversheds, DLA Piper announced yesterday a major legal services agreement with Linde (a Germany-based gas and engineering company).
Under the arrangement, Linde goes from 150 law firms to 5. Here’s an explanation:
Under the radical, new model introduced by Linde, DLA Piper will advise on a range of matters across Europe, Asia Pacific and the US, which amounts to 80 per cent of legal spend. This single solution approach incorporates matters such as commercial and compliance work, IP, employment, litigation, property, data protection, regulatory, product liability and non-strategic acquisitions and disposals. DLA Piper will work closely with the 65-strong internal legal services team at Linde to deliver quality legal solutions and obtain more value from its outsourced work.
Four other firms made the cut:
The other law firms retained by Linde are Linklaters, which will advise on all corporate issues outside the US; the German law firm Hengeler Muller, which has retained an advisory role on company law issues; Simpson Thacher, which has been retained to advise Linde on strategic corporate work in the US and Shearman & Sterling which will handle the Group’s antitrust matters.
So for lawyers at the other 145 firms left at the altar, go ahead, have another cup, call the office and say you’re running late.
ACC CLO Survey: The Law Firm Reality
January 18, 2007 | Filed Under Law Firm Trends, Legal Resources, Managing
After a quick snapshot last week, here’s a closer look at the Association of Corporate Counsel’s 2006 Chief Legal Officer survey.
The press release accompanying the survey noted that 25% of CLOs planned to increase their use of law firms in 2007.
Sounds good; that’s why they pay rainmakers big bucks.
But on the flip side, 54% said they would not change the number of firms they use, while 15% said they would decrease their use of law firms. 32% of respondents said they fired a firm in 2006; 20% of those firms were characterized as having a “significant relationship” with the client.
These exit percentages show the measure of the challenge law firms face in growing top-line revenues without raising rates or increasing billable-hour targets.
The law firms chasing those 25% of companies who might want to add another firm to the mix may want to consider the top three reasons for giving law firms the boot:
1. Cost management
2. Mishandling matters
3. Lack of responsiveness
While managing partners have their eye on the prize of increasing the number of clients, it’s clear they need to work hard to keep current clients happy. Given these reasons for firing firms, here’s a memo to compensation committees: throw a few dollars to partners minding active client matters. Retention is the foundation for expansion.
Grist for the legal mill is not easy to find. Or to keep.
ACC Survey: More Law Firm Work?
January 11, 2007 | Filed Under Law Firm Trends, Legal Resources, Managing
Some law firm managing partners may be getting a gift in 2007: more legal work from their favorite GC.
According to the recently released Association of Corporate Counsel 2006 Chief Legal Officer survey, 25% of law departments plan to increase the use of outside counsel. The 2005 survey showed 16% of departments surveyed planned to use more outside services.
The survey itself is here.
Additionally, the survey showed the following mix of work as important to CLOs:
Chief legal officers and general counsel continue to spend the majority of their time on corporate transactional work (65% named it as one of their top three areas of focus), followed by compliance (50%) and board relations (29%). When asked to identify the next “big issue” they will face, respondents identified “international expansion/globalization issues” and “document/records management” as the two most important.
Tomorrow, I’ll dig a little deeper into the survey. But for now you can bet some firms may revise proposed rate increases.
Upward?
(Update : 12 Jan 07): Expect the follow-up early next week; too heavy a topic for a Friday.
Convergence Like a Laser Beam
January 9, 2007 | Filed Under New Services, Legal Resources
Tyco announced today that counsel for legal matters relating to Europe, the Middle East, and Africa (EMEA) will move from 250 law firms to one, Eversheds.
At the same time, Tyco is “reorganizing” its in-house legal team, although no details were provided.
According to Trevor Faure, Tyco’s EMEA General Counsel:
Under this model, the department is managed by senior lawyers with responsibility for a specific business segment in the region, regional lawyers who report to them and provide the local law and language expertise across segments, and external resources who are dedicated, full-time Eversheds lawyers to ensure broad geographic coverage and an ongoing link with the Eversheds parent firm.
Some of the features of this arrangement include these in EMEA countries:
– A 24 x 7 x 365 multi-lingual legal hotline.
– Local language and business expertise in contracts, employment, compliance, environmental health and safety, major litigation, intellectual property, and general corporate matters.
– Contract automation, business process redesign, and a legal extranet integrated into Tyco’s business by Eversheds (to facilitate online reporting and invoicing).
– Fixed and risk-sharing fee structures, as well as predictable, fixed fees allocated based on business size and complexity.
– Full-time, dedicated Eversheds lawyers in the United Kingdom, France, Germany, Italy, the Middle East, Poland, Benelux, and South Africa linked to the regional teams.
Three quick reactions:
1. Tyco is clearly trying to push the envelope on the mix of inside/outside legal services, driven by business demands.
2. Eversheds shows innovation in a legal market that sometimes acts like an Etch-A-Sketch is cutting edge.
3. Outsourcing of legal services doesn’t always mean going from law firms to new service providers. Law departments aren’t immune, either.
Hopefully we will learn more about this arrangement from the principals.
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