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Should law firms charge the same rates for their equity and nonequity partners? Few companies seem to consider that question when they’re hiring outside counsel. But the law department at E.I. du Pont de Nemours & Co. has taken note of the steady rise in nonequity partners at its 43 preferred providers. Recently, DuPont decided that its law firms must reveal the status of their partners when they ask for fee increases. Julie Mazza, DuPont’s manager of law firm partnering, says the company already has some idea about whether the partners who work on its matters are equity or nonequity. That’s because the Wilmington, Del.-based chemical giant asks its outside counsel to fill out an annual benchmark survey. On this form, firms are asked to disclose various details about the attorneys they assign to DuPont matters, including gender, ethnicity and partner status. Equity v. nonequity partners Earlier this year, however, DuPont decided that when its regular firms ask for a fee increase, they have to reveal whether partners are equity or nonequity. (Firms can submit requests for fee increases only in December and January.) Mazza stresses that DuPont isn’t averse to having nonequity partners work on its matters. “We may even request someone [who is a nonequity partner]. There are all kinds of reasons we would want someone to work on our matters,” Mazza said. “We are not as interested in their status at the firm, as in the value that individual brings to DuPont.” But DuPont is interested in whether firms are billing their partners at appropriate rates. In 2002, DuPont created a nine-part application process in which law firms must explain and justify any requested rate hikes. As a result of the company’s latest decision, such requests must list the status of partners assigned to DuPont matters. Mazza explains, “If the requested rate for an equity partner is $400 and the rate for a nonequity partner is also $400, I can ask whether it should be the same, given that one shares in the profits of the firm and the other is salaried.” Mazza says she decided to modify the fee-request application after noticing an increase in nonequity partners when the company’s firms submitted their most recent benchmark surveys. This rise isn’t limited to DuPont’s outside counsel. According to The National Law Journal‘s annual survey of the 250 largest law firms in the United States, the NLJ 250, the percentage of partners who hold nonequity status at the nation’s largest firms has nearly doubled over the past decade. The NLJ and The American Lawyer, a sister publication of the NLJ, also report that at least three of DuPont’s primary law firms have more than 40% nonequity partners. They are Shook, Hardy & Bacon of Kansas City, Mo., with 52.3% nonequity partners; McGuireWoods of Richmond, Va., with 47.2%; and Kilpatrick Stockton of Atlanta, with 42.5%. The firms did not respond to requests for comment for this article. Status unknown? Legal consultants say that most companies probably don’t know the status of the partners working on their cases. “I think [in-house counsel are] oblivious to who is an equity or nonequity partner,” said Rees Morrison, director of law department consulting at Hildebrandt International. William Johnston, a Hildebrandt director who works with law firms, agrees. “Who is and isn’t an equity partner [at a law firm] is not something that is widely publicized externally [or] internally,” he said. Morrison said this head-in-the-sand approach may be a mistake. To control law firm costs better, in-house counsel should understand the compensation system at their outside law firms, he said. And whether a partner has equity or nonequity status is part of the calculus. That’s exactly DuPont’s thinking, Mazza noted. All kinds of considerations go into the company’s decision about whether to grant a fee increase, and partner status may not be the most important factor at the end of the day. But Mazza said that asking for this information “will give us an opportunity to talk about it.”

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