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Apparently even big companies don’t have as much leverage with their outside counsel as they’d 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 and Co., FMC Technologies Inc., General Motors Corp. and Microsoft Corp. Together they oversee a collective annual legal budget exceeding $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 says, “The bigger they get, the more insensitive they might become to clients’ needs.” Microsoft deputy GC Kevin Harrang adds 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 CFO,” Harrang says, “[but] those days are over.” Sager says 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.” Mark Chandler, Cisco’s GC, 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 says. 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’s mostly in the discussion stage. (Carr acknowledges 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 on the creation of 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?” wonders Carr. “The whole industry is based on inefficiencies and grounded in inefficiencies.” Some of the group’s efforts will be “very threatening to law firms,” Carr admits. He already knows about pushing boundaries, having introduced an alternative billing system in which FMC holds back 20 percent 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,” he says.” In this instance, at least, Sisyphus has some friends. Susan Beck is a San Francisco-based senior writer at The American Lawyer magazine, which is affiliated with GC California.

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