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When Joseph Ryan arrived at Marriott International Inc. back in December 1994 as its new general counsel, he inherited an Augean stable of more than 200 law firms. At the time, the bloated legal Rolodex of the Bethesda, Md.-based hotel chain was no different from that of most Fortune250 companies, which distributed work here and there, sometimes without rhyme or reason and often based simply on personal relationships. But Ryan, who had been managing partner at O’Melveny & Myers, saw a better way. Through requests for proposals and dog-and-pony shows, Ryan chose 10 law firm allies and let the rest go. Marriott and a handful of others-most notably E.I. du Pont de Nemours and Co.-pioneered the convergence movement of the late 1990s, in which legal departments slashed the number of law firms they worked with. Today, the exception has become the rule. According to a 2004 study by Boston’s BTI Consulting Group Inc., corporate law departments are using 25% to 30% fewer law firms than they did just three years ago. Ten years after convergence, the same firms that made the cut still handle 90% of the work that Marriott farms out, said Donna Miller, who manages in-house/ firm relationships (the remainder goes to local counsel). Marriott’s experience highlights an emerging phenomenon: After companies complete convergence, they stick with their choices. “The so-called convergence wave has already rolled through most legal departments,” said Rees Morrison, a principal at the Somerset, N.J.-based legal consulting firm Hildebrandt International Inc. “And there’s a realization that it’s probably better to work with the devils you know rather than the devils you don’t.” Since 1988, The National Law Journalhas surveyed the legal departments of the Fortune250 companies and reported on which law firms they use most often. In our annual survey, undertaken in conjunction with Corporate Counselmagazine, an NLJ sister publication, we ask the GCs at the Fortune250 companies which firms they use as their “primary outside counsel.” In the past few years, the same firms that appear prominently on the NLJ’s survey of the nation’s 250 largest law firms show up at the top, with relatively minor changes. This year, the lineup shifted even less.
Most-mentioned firms in survey
Jones Day 43
Skadden, Arps, Slate, Meagher & Flom 39
Davis Polk & Wardwell 33
Kirkland & Ellis 31
Morgan, Lewis & Bockius 31
Sidley Austin Brown & Wood 30
Mayer, Brown, Rowe & Maw 26
Hunton & Williams 22
King & Spalding 21
McGuireWoods 21

As Marriott’s example demonstrates, convergence stabilizes the stable in several ways. Each “partner firm” knows it will get a sizable chunk of the $20 million a year Marriott spends on legal fees-Miller said she tries to send the same amount of work to each-and they won’t have to compete with nonpartner firms for the business. As a result, outside counsel work hard to keep Marriott happy. Miller, who was involved in the initial convergence shakeout, said cost savings was less of a factor than quality, but firms have been willing to accommodate the company there as well. “After 9/11, things were pretty bleak in the hotel business, and we were hurting,” Miller said. “When we told our firms we couldn’t really take the rate increases they were used to getting, they all held their rates flat for the year.” Our survey asks companies to list “primary outside counsel” in several practice areas, including litigation, corporate transactions, labor and employment, intellectual property and corporate governance. As in previous years, we leave it up to the respondents to define “primary” however they feel appropriate. The 120 companies that supplied data on outside counsel named 421 law firms in total, up from 397 firms mentioned last year. The top-place finishers may look familiar but, that said, there’s no Lance Armstrong of the law firm world. Rather, firms take turns leading the pack. This year Jones Day shot ahead of last year’s all-around leader, Davis Polk & Wardwell, to capture first place as the “most mentioned” firm across all categories. Skadden, Arps, Slate, Meagher & Flom came in second, up from third in 2004. Davis Polk skidded from first to third this year. Other 2004 leaders held their own: Kirkland & Ellis; Morgan, Lewis & Bockius; and Sidley Austin Brown & Wood all maintained their slots in the top 10. In terms of specific practice areas, Kirkland & Ellis kept its crown as the reigning go-to litigation firm, with a total of 17 mentions. Jones Day stayed in second place, but closed the gap with Kirkland by several lengths, pulling in five more mentions than last year (for a total of 15). This year Skadden cemented its first-place status in corporate transactions, garnering one more mention than rival Davis Polk, which tied Skadden for the lead last year. Skadden also catapulted into the top spot in corporate governance, with an eye-popping eight additional mentions, bringing its total to 15. For the most part, however, law firms sail in a Sargasso Sea. “Convergence is a change process-it’s disruptive,” said Daniel DiLuccio, a principal in the Newtown Square, Pa., office of legal consulting firm Altman Weil. “It’s not something you go through every year.”

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