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Five years ago, Sun Microsystems Inc. worked with about 400 different outside law firms. Now the company's general counsel is trying to bring some sanity to the inside-outside bond.

Over the last few months, the company has dramatically pared down its roster of outside counsel. It has now designated nine firms to handle all its routine work, such as intellectual property advice, sales contracts, licensing and transactions.

The list of nine firms, Sun General Counsel Michael Dillon told The Recorder Tuesday, is the culmination of a nationwide effort by the company's legal department.

"The reality is that three or four years ago and further back, we didn't do an effective job of managing our [spending]," he said. "We had no real processes around how you engage in outside counsel."

San Francisco Bay Area firms on the list are Sedgwick, Detert, Moran & Arnold; Fenwick & West; and Hanson, Bridgett, Marcus, Vlahos & Rudy. National firms include Kirkland & Ellis and DLA Piper. The list is rounded out with Memphis-based Baker, Donelson, Bearman, Caldwell & Berkowitz; Washington, D.C.-based Crowell & Moring and Hogan & Hartson; and Denver's Holme Roberts & Owen.

The company still employs several more firms than those on its "preferred partners" list for specialty work, such as patent prosecution, Dillon said.

The general counsel would not discuss why some firms didn't make the list.

Several firms that have represented Sun in major litigation or transactions in the last year did not appear on the list, among them Day Casebeer Madrid & Batchelder; Skadden, Arps, Slate, Meagher & Flom; and Wilson Sonsini Goodrich & Rosati. Another firm not on the list, Howrey, recently helped Sun reach a settlement with fellow Silicon Valley company Azul Systems Inc. over patent infringement claims. In a posting on his blog Tuesday, Dillon called the resolution "favorable to Sun."

It's unclear whether Sun's relationship with any of these firms has changed.

Apart from the cost-cutting and organizational motivations, Sun decided to change its approach to outside counsel because the law firm business has changed, too, Dillon said.

The traditional law firm billable-hours model is "disjointed" from business reality, he said. Pressure to bill more hours works at cross-purposes with corporate departments that are "maniacally" trying to cut costs, he said. The race to meet New York associate salary standards "just exacerbates the problem," he said.

"I don't care how bright the associate is, they're not worth what they're paying them, and if I have to absorb that cost, it's not optimal," he said. "I'd rather pay a very seasoned attorney who has more experience."

Where attorneys at large firms used to get work based on their firm's reputation, Dillon said it's easy these days to search the Internet or query colleagues about the experience, manner and background of any attorney.

Sun's process of selecting its firms was essentially a beauty contest. To prune its patent prosecution firms, for example, the company sent out bid packages outlining its financial and legal needs, and then invited some firms to an online reverse auction where they could anonymously underbid one another to win Sun work. For its "preferred partners" list, the company used bid proposals and interviews.

Cost was not the chief criterion, however, Dillon said. "We don't necessarily take the firms that are the lower price," he said. "[Higher bidders] may have more technical experience that you need."

Yet a willingness to propose creative fee arrangements, such as flat fees, was rewarded, he said.

"We had some firms who didn't even want to have those discussions" about bids and alternative fees, he said. "I think it's a good litmus test. If they won't, then they're probably the type of firm that we don't need to do business with."

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