Trying Novel Approaches to Create In-House Value
Law is a business. Thats the gospel according to the in-house law departments and firms that were recognized as Value Champions by the Association of Corporate Counsel. And the leaders in keeping costs down while still achieving desired legal outcomes were happy to spill their trade secrets at a roundtable event Thursday, presented by the ACC.
There are really good resources out there to help in-house counsel focus on value, said Rockwell Collins general counsel Gary Chadick. The aerospace and defense firm paired with outside counsel from Seyfarth Shaw to implement several value-focused practices, including the waste elimination strategy Lean Six Sigma and alternative fee arrangements. Chadick frequently turned to Seyfarth Shaw partner Lisa Damon to brainstorm solutions and come up with novel arrangements for the firms services.
Damon said she sees the legal world making significant strides in the emphasis everyone places on value, but still sees room for improvement. In terms of the industry, were seeing a lot more in-house counsel turning to alternatives, and trying different kinds of alternative fees.
Rockwell Collins did a whole project around success fees, said Damon, noting the companys willingness to experiment and collaborate with the outside counsel. And alternative fees are starting to stick, according to Damon. I feel very optimistic were all moving the initiative forward, she said.
The Rockwell/Seyfarth partnership was one among the seven between in-house counsel and outside firms that the ACC named as a 2012 Value Champion. The ACC also recognized company law departments for their achievements in what Veta Richardson, ACC president and CEO called creative lawyering and good old-fashioned business sense.
Medtronics legal department was named a champion, for its 40 percent reduction in spending in the past two years, coupled with significant legal wins in that time.
Cam Findlay, senior vice president, general counsel, and secretary at the medical technology company, emphasized the need for lawyers to look at themselves as a business function. Businesspeopleits a tautologyare businesspeople, he said. They like to see other people and business functions act as businesspeople.
Since Findlay has spearheaded the legal departments move toward value-based billing, his in-house group has gained respect within the company. I would say that our legal department has never had a better internal reputation at Medtronic that its got now, he noted. I think they like the fact that were aligning the interests of the outside law firm with the interests of the corporation.
Pharmaceutical giant Pfizer Inc. tried out an approach to collaborative legal services that the ACC described as innovative and Pfizers assistant general counsel Ellen Rosenthal went so far as to label radical.
The company set up the Pfizer Legal Alliance, a standalone collaborative venture between in-house attorneys and 19 outside firms, with Rosenthal serving as chief counsel of the group. The new legal model was a tough change to sell internally, Rosenthal said, but ultimately has benefited the company.
Our finance colleagues didnt know quite what to think of it, Rosenthal said. The arrangement, which relies on fixed fees, has helped stabilize Pfizers legal budget. And company executives at Pfizer have come around to that. Our business colleagues are considering similar models with partners in the financial group.
As an added bonus, the panel of legal counsel Pfizer hired offered a large and broad knowledge base to the company. Weve appreciated having a known bench of lawyers who have gotten to know our business and gotten to know each others shared expertiseall of which has served to educate our in-house lawyers. Rosenthal said GCs shouldnt be afraid that big firms wont work with them under fixed fee arrangementsPfizers alliance includes Clifford Chance, Skadden, DLA Piper. I think this can work for anyone, she said.
Sherwin-Williams, a paint and coating producer, reached a legal spend savings of 15 percent through creative meansboth inside and outside counsel underwent technical product training, and they walked away as certified specialists in the industry they represent. Weve eliminated costs of training outside counsel, said Ron Tamburrino, associate general counsel. Weve also eliminated the need for more businesspeople. Weve successfully driven down costs, reduced in-house counsel costs, and internal technical peoples time.
Gallagher Sharp partner Bob Eddy, who collaborated with Tamburrino on implementing the approach, said that the training gave the outside counsel knowledge of the clients products, services, and overall management at a real level of depth.
The name-brand appliance maker Whirlpool Corporation, by focusing on coordinating efforts, reported that it achieved a 40 percent savings in its legal budget. Whirlpool senior counsel David Grumbine credited that efficiency to the thorough partnership between the company and outside counsel Wheeler Trigg O'Donnell. The firm cannot be a task-based service provider. They have to be a true partner, said Grumbine. If information is shared among in-house and outside counsel, Grumbine said, the company will improve its handling of litigation, and ultimately save time and money. He noted that they would ask the firm to become true partners to help us get better at executing the companys legal function. This does not just mean good resultsthats a given. This is going beyond that to help us do better.
See also: "ACC Reveals Its List of In-House Value Champions," CorpCounsel, June 2012.