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Sam Walton, the founder of Wal-Mart Stores Inc., credited its success to smart inventory management. Now the world’s largest retailer is applying that same tactic to its law firms. Wal-Mart has spent the last 18 months assembling a “Capital Cities Network” of go-to firms that will handle regulatory work and other major legal matters. (The company will continue to rely on other firms for smaller things like minor personal injury claims.) The plan, said Associate General Counsel Samuel Reeves, is to have one law firm per state. Reeves said he’s given up on a target date for completing the selection process-”We’ve had several already”-but as of September, the company had nailed down preferred providers in 44 states. Wal-Mart General Counsel Thomas Mars said that shortly after he became head of the legal department about three years ago, he started to think about reducing the company’s battalion of 400-plus firms. At first, Mars said, “we thought we’d end up replicating the DuPont model,” referring to the best-known of the so-called convergence programs that aim to reduce the number and fees of outside firms. But Mars said that after a visit to the legal department at E.I. du Pont de Nemours & Co., “we decided it would never work for Wal-Mart,” given the vast geographic spread of the retailer’s 3,600 U.S. stores. Issued ‘RFPs’ So Mars and Reeves developed the Capital Cities Network. They started the selection process by issuing requests for proposals, or RFPs, to law firms with a significant “presence” in each state capital. Although Reeves declined to give specifics on the criteria for making the final cut, he said firms were selected based on their fee arrangements-”just like any other client”-and diversity statistics. “We consider them our ‘first call’ law firms, to whom we can turn for a quick response if an issue arises in a state where we need legal advice and counsel,” Reeves said. He added that the list consists of a mix of small local firms and branch offices of large national firms, including Gibson, Dunn & Crutcher and Manatt, Phelps & Phillips, both based in Los Angeles; and Gardner Carton & Douglas of Chicago.

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