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Apparently even big companies don’t have as much leverage with their outside counsel as they would like. For almost a year, lawyers from eight of the largest corporations in the country have been meeting and exchanging information. Their goal? To get better rates and service from their law firms. The group, which first came together last fall, includes in-house attorneys from Cisco Systems Inc., E.I. du Pont de Nemours & Co., FMC Technologies Inc., General Motors Corp. and Microsoft Corp. (Participants declined to identify the remaining three companies.) Together, the group oversees a collective annual legal budget that exceeds $1 billion. While they’re still mostly in the talking stage, they’ve moved forward on a few projects, including an effort to rate selected law firms. According to Thomas Sager, associate general counsel at DuPont, the coalition is “an attempt to level the playing field.” Pointing to the size of recent law firm mergers, he said, “The bigger they get, the more insensitive they might become to clients’ needs.” Microsoft deputy GC Kevin Harrang added that corporate counsel are facing more pressure at their companies to keep costs down. “Maybe the legal department was once off the radar screen of the [chief financial officer],” Harrang said, “[but] those days are over.” Sager said that he and his fellow coalition members have “been trying to foment change for the last 10 to 12 years. We realized about a year ago that if we act more collectively, we can leverage our experience to drive increased efficiency.” Cisco GC Mark Chandler stresses that the group isn’t just focused on getting lower fees. “We’re trying to get firms to think about providing services more efficiently,” he said. Outsourcing opportunities As part of the group’s effort, Sager traveled to India in March to research outsourcing opportunities for legal work. Jeffrey Carr, general counsel at FMC, is working on a “pet project” to rate law firms. This summer he plans to create a Web site, available only to the group’s members, that will rank firms in a half-dozen categories. The group is also talking about banding together to make collective purchases of legal services, although that is mostly in the discussion stage. (Carr acknowledged that they do need to be mindful of antitrust constraints.) In May, the coalition took its first step toward a collective purchase when it invited roughly 20 law firms, plus some other companies, to bid to create an online system that human resources departments could use to get automated answers to routine questions. “Why do we pay law firms that pay associates $140,000 a year to do . . . commodity-type work?” FMC’s Carr asked rhetorically. “The whole industry is based on inefficiencies and is grounded in inefficiencies.” Some of the group’s efforts will be “very threatening to law firms,” Carr admitted. He already knows about pushing boundaries, having introduced an alternative billing system in which FMC holds back 20% of billed amounts. If outside counsel achieve stated success and efficiency targets, they can recoup the amount held back. Still, Carr concedes that it won’t be easy for FMC and its corporate allies to dramatically alter law firm habits: “I think we’re like Sisyphus trying to push a really big rock up a hill.” In this instance, at least, Sisyphus has some friends.

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