The economy may be showing signs of improvement, but controlling outside legal costs is the top priority for general counsel -- even if it requires taking some "draconian" measures, one top lawyer at the Association of Corporate Counsel's 2009 Annual Meeting says.
For the first time in three years, in-house counsel say that reducing outside legal spending is now their first priority, according to the 2009 Association of Corporate Counsel/Serengeti Managing Outside Counsel Survey, released at the ACC meeting in Boston. And as part of the ongoing ACC Value Challenge, several sessions at the meeting are trying to help in-house lawyers get more value from the law firms they hire.
In the session "The Slow Motion Riot -- Revolutionizing Law Department Cost Management," Jeffrey Carr, general counsel of FMC Technologies Inc., talked about how companies can start doing more alternative fee arrangements. But he admits it's not an easy task or for the faint of heart.
"Once you decide to go down this path, there's only one question you need to ask law firms," Carr says. "Will you do this? Yes or no. If they say no, they are free to work elsewhere. Draconian? Yes. Effective? Absolutely. But it does take some backbone."
In-house lawyers just starting out should define what value means to them, and figure out what they want from outside counsel. Panelists say finding providers willing to be creative isn't difficult. But in-house lawyers have to build a support network with strong leadership internally, starting from the top down. Once arrangements are underway, law departments should publicize success stories to spread the word that alternative fees work.
Defenders of the billable hour are scarce these days, but overcoming resistance to change is always a challenge. The solution is simple, says Janine Dascenzo, associate general counsel at General Electric Co. "I think you overcome resistance by rewarding people who do it well," she says. "You don't reward people who don't."
Alternative fee arrangements are just one way to get more value from law firms. Other approaches were outlined in the panel "50 Ways and Counting to Drive Value into Law Firm Relationships." Some involved strategic management, such as setting annual goals, creating a crisis management plan, or writing a mission statement for the legal department.
"Every lawyer needs to have a voice in what the mission statement looks like," says Kristin Campbell, general counsel for Staples Inc. "It really drives ownership."
Other ideas involved creating internal systems to cut costs, such as setting standards for budgeting or launching a knowledge management initiative. Outside firms need to be managed closely, too. Their compensation can be tied to outcomes, and formal processes can evaluate their performance.
"By starting small and doing things in a coordinated way you can be very successful," says Philip Crowley, assistant general counsel at Johnson & Johnson, "in ways you may not even be able to imagine."
Follow complete coverage from the Association of Corporate Counsel's annual meeting in Boston held from October 19-21 on CorpCounsel.com.