Do GCs Want Change? A Rejoinder
June 20, 2008 | Filed Under New Services, Managing
My friend Bruce MacEwen swung for the bleachers this week with a herculean post in his Adam Smith, Esq. weblog.
Bruce takes a discussion from Legal OnRamp and puts it out there for all to see (his mention of Paul here refers to Paul Lippe, Legal OnRamp’s CEO). The subject is whether GCs really want change in the legal industry, and Bruce bravely answers “no”:
But I actually have a more subversive suggestion, which falls under “E. Other” in Paul’s schema: I don’t believe GC’s really want things to change, for all their trashmouth game talk. GC’s want their backsides protected by the imprimatur of the Magic Circle, the New York Elite, or the Skadden/Latham brand name. GC’s don’t want “good enough” quality; they want top-drawer quality.
It sure beats your run-of-the-mill “recent developments in trover and replevin” blog post.
I actually agree with Bruce on one level. GCs don’t want things to change. Who does? Change is hard to face and harder still to make work.
Where we part ways is over the conclusion that many GCs use top-tier New York and London firms on major deals and litigation because they don’t want change. It could just be the right tool for the job. And I really disagree about saying this is an exercise in CYA. GCs I know don’t think that way. (Maybe I’m just a hayseed from the Heartland…)
For most GCs, major deals and litigation are a minor part of their budgets, smoothed out over X number of years. In the rest of the spending, I actually see more signs of change, and a desire to change, than ever before.
Any one general counsel can turn a back on change. It may work for awhile, but over the long run, there’s a name for the person who will force the issue. Your CEO? Perhaps. Your CFO? More likely.
Most likely: Your successor.
You really owe it to yourself to pour a glass of cabernet and read through Bruce’s entire post. It’s excellent.
How general counsel can navigate change is a subject that I have been spending a lot of time on recently. I’ve mentioned two projects it in my Wired GC — Select newsletter in the last few months, and I’ll touch on both here shortly.
One thing we can agree on: for the legal market, change makes glaciers look fast. You better stand back at the right moment, however…
Return on Legal Resources
October 2, 2007 | Filed Under Legal Resources, Managing
The law department as profit center?
Bloomberg reports that this group at DuPont was responsible for $290 million in revenue last year,which included a $92 million asbestos insurance settlement.
According to the article:
The asbestos agreement in December 2006 resulted from a three-year-old DuPont program to find ways to generate revenue by filing lawsuits the company would not otherwise have initiated or by seeking licenses from companies using its patents. The law department has brought in $630 million since 2004, according to DuPont assistant general counsel Thomas Sager.
Dupont is integrating alternative fee arrangements into cost recovery activities:
The firms that handled last year’s insurance settlement, Pittsburgh-based Kirkpatrick & Lockhart Preston Gates Ellis and Beaumont, Texas-based MehaffyWeber, reduced or waived their hourly rates and shared about $15 million of the settlement.
Big settlements can skew results a bit, but it’s an important discipline for a law department. It’s perhaps an even more important signal to send to the CEO and the board.
GE Legal Takes the Lead
April 18, 2007 | Filed Under Technology, Managing
Corporate Counsel magazine has announced the winner in its second annual selection of the best US legal department. Out of 500 legal departments who were invited to participate, 30 responded, with self-nomination materials.
The winner: GE. As the full report notes, GC Brackett Denniston leads an in-house team of 1,225 lawyers (with a budget near $1 billion), who make particularly good use of technology. One example is the Early Case Assessment (ECA) program:
The matter gets logged into the legal department’s tracking system. Within 60 days to 90 days, lawyers assigned to the case identify and interview witnesses; collect, review, and report on relevant documents; and assess the risks. The attorneys can also tap into a system designed by the legal department’s technology team and pull up any legislation or case law that could affect the dispute. Ultimately, the litigation team can decide, early on, whether it’s best to settle or take the case to trial.
ECA and other initiatives allowed GE to reduce litigation costs from $120.5 million in 2002 to $69.3 million in 2005. It’s an interesting and important statistic when a growing company lowers legal costs. Something for law firms scrambling for more business to ponder.
GC Legal also uses a robust IT department to make it work, including:
… ten full-time staff and one attorney. They custom-tailor systems to meet the company’s legal needs, such as virtual deal rooms, work-flow tools, and tracking systems. The group spends $2 million a year developing and supporting those systems — but they estimate the up-front costs save millions in lawyer productivity each year. “I’d love to buy more [software] off the shelf,” says John Brudz, senior counsel of legal tech, “but we get more added value [developing it ourselves] because off the shelf just doesn’t work for our size.”
You can hear a collective sigh from the legal tech community, who would love to get some of that spend allocated to their products.
Like its core businesses, GE Legal leads from a combination of top-shelf talent and a concentration of financial and capital resources. It almost seems like they have reached critical mass, and are generating improvements that come from the network that is GE Legal.
Also recognized by Corporate Counsel are the legal departments of J.C. Penney, Allstate, and Accenture.
Who gets the work?
April 13, 2007 | Filed Under Law Firm Trends, Managing
The Connecticut Law Tribune provides an interesting glimpse into the world of how GCs select law firms.
A good summary of the process:
Farming out legal work, a survey of 41 companies based in New England and subsequent interviews with their general counsel revealed, is a delicate balance of personal and professional relationships, budget management and hunting for first-class legal expertise. Though legal work often flows to the largest law firms, the survey found there’s room for solo practitioners to carve a niche, even with some big-name businesses.
I have had some very good results with solos who have big-firm experience and a focused area of expertise. It can really be the best of both worlds for a GC, and a good counterpoint to the large firms that are part of the outside counsel roster.
A concise summary of the process comes from Clayton Holdings GC Steven Cohen:
“You get a lot more out of developing relationships rather than parsing out work or creating competition for work, and pitting one firm against another,” Cohen said. “We build up a few very good relationships with firms interested in supporting our growth. We want the firm to get familiar with our business and grow with us. We want the firm to be excited to take our [telephone] calls.”
Any firm that’s not excited to take a client’s telephone calls may find an eerie quiet developing over time.
Law Firm Listens to Associates
April 1, 2007 | Filed Under Law Firm Trends, Managing
According to legalweek.com, the UK Freshfields law firm walks the talk and actually asks “how high?” when the associates say “jump!”
Freshfields Bruckhaus Deringer was so keen to show it cared about what its associates had to say at an away-day last week that it replaced the firm’s reception carpet within hours of complaints about its colour.
More than 200 associates met with the City giant’s management to discuss issues affecting associates, such as remuneration, appraisals and career development last Friday (23 March).
Following a number of complaints about the carpet, which some described as “80s chic”, Freshfields’ management called in workmen to replace it on the same day, with a “more muted” style.
(ed note: unlike in prior years, this is not an April Fool’s Day joke. Reality beats fiction every time. And the Wired GC is all about “70s chic”, such as this little shag number known as “Flamingo Road”).
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