ALM Properties, Inc.
Page printed from: Corporate Counsel
Select 'Print' in your browser menu to print this document.
Best Legal Departments 2012: Best of the Rest
Two years ago NetApp Inc. started restructuring its law department to better support its rapid growth. The data storage and management company, which saw its revenue climb from $4 billion to $5 billion last year, had aligned its GC position directly under the CEO and, in August 2010, had brought in Matthew Fawcett to fill it. Within a year the new legal chief had not only revamped the department but drafted a formal pro bono policy to encourage lawyers to get involved in their community.
We like what we see; the changes have paid off. In-house lawyers at the company have kept in step with NetApp through nine consecutive quarters of 20 percent growth. And when the Sunnyvale, Californiabased company bought LSI Corporation's storage array business last year for $480 million, NetApp's lawyers were ready. The deal required carving out properties and assets from multiple jurisdictions across the globe. NetApp's lawyers put in long hours to secure the transaction, which added in excess of 100 patents to the company's portfolio.
After the sale, one of the first orders of business for the legal team was assigning the new IP work to a single outside firm. Under LSI's control, the legal work had been handled by more than 15 firms. By consolidating the patents and using a fixed-price model, NetApp was able to save 20 percent on fees.
As NetApp continues to grow, so does its personnel. It added 2,500 new employees in 2011, and the size of its law department, now 24 lawyers strong, nearly doubled in recent years. In typical Silicon Valley fashion, Fawcett promotes familiarity by encouraging lawyers to participate in blogs and Twitter feeds. He also employs low-tech methodsinviting small groups to "Breakfasts with Matt" and holding speed-dating-style mingling events. What's not to like?
Who doesn't appreciate a law department that saves its client money by taking on more work? Ten years ago, outside counsel fees consumed about 70 percent of Northeast Utilities's legal budget. As the Connecticut-based utility's legal demands grew, the law department's leaders shored up internal capabilities to reduce their reliance on outside firms. The department has realized savings of about $200 an hour by handling the bulk of the company's legal work on its own. In-house lawyers still look to outside firms for expertise in certain areas, but in 2011 outside legal services accounted for just 30 percent of Northeast's legal spending.
Taking on extra responsibilities has required the law department to work more efficiently. Last year, with a department of 39 lawyers, Northeast defended 35 separate lawsuits brought by landowners who claimed that a transmission system upgrade violated their property rights. Northeast succeeded in having all the cases transferred to a single judge, and internal lawyers worked in tandem with outside counsel to defend the company. Development of a case management plan made it possible for lawyers across cases to share strategies and ensure that their positions stayed consistent.
By working closely with their clients, Northeast's lawyers feel more connected to the business. In-house lawyers are also better equipped to protect the company from potential risks. All of Northeast's internal lawyers and paralegals participate in an annual risk assessment program. Although outside counsel also contribute to the process, in-house lawyers are solely responsible for evaluating threats and devising responses.
Darden Restaurants may have a small law department, but its 16 lawyers aren't afraid to pile the work on their plates. Historically, the company's in-house lawyers have led the acquisitions of such full-service brands as Red Lobster and The Olive Garden. The most recent was the $59 million purchase last year of Eddie V's Prime Seafood and Wildfish Seafood Grille, in which Darden's law department played a key role.
As the company's collection of restaurant chains has expanded, so, too, has its employee base. With approximately 180,000 restaurant workers, Darden dedicates a significant amount of its in-house resources to handling employment matters. By requiring arbitration for employment disputes, Darden has been able to reduce its outside counsel spend and settlement costs by more than 70 percent. Substantial savings have been realized from the use of nonlawyers to represent the company in cases where the claimant doesn't hire a lawyer.
Darden also handles all of its Equal Employment Opportunity Commission and state agency employment charges in-house. Of the 159 claims brought against the company last year, not one resulted in a lawsuit being filed against the company. The law department settled those claims for an average cost to the company of just $117including outside fees and costs. That's less than a family of four might pay for dinner at one of Darden's restaurants.
We may not be gourmands, but we know value when we see it.