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No one needs to explain the personal dynamics of a lawyer-client relationship to Washington, D.C. businessman John Henry II. A four-time entrepreneur, Henry has relied on the same attorney through all his ventures — Cadwalader, Wickersham & Taft partner John Fritts. So what made him think that legal services could be bought and sold over the Internet, like books or old baseball cards? Henry claims it was all his lawyer’s idea. “About a year and a half ago, Jack and I were talking about business-to-business online marketplaces and he said, ‘Why don’t we auction corporate legal services?’ ” Henry recounts. Eighteen months later, with a management team of high-profile attorneys falling into place, Washington, D.C.-based eLawForum is starting to gain momentum. To be sure, there are plenty of arguments against ventures linking lawyers and clients over the Internet. And the higher you go up the food chain of legal work, the riskier the idea seems. After all, hiring a lawyer is not as simple as ordering a book from Amazon.com or finding the lowest price for auto parts. The selection of an attorney often comes down to intangibles — a personal relationship, a particular expertise, or a track record that cannot be valued in hard dollars. But those lawyers who would dismiss the concept altogether may have a hard time dismissing eLawForum. Among those staking their reputations on the company are John Klotsche, former chairman of 2,500-lawyer Baker & McKenzie; Samuel Gillespie III, former general counsel of the Mobil Corp.; David Roll, former chairman of Washington, D.C.’s Steptoe & Johnson; and C. Boyden Gray, former counsel to President George Bush. Already the startup has recruited more than 50 companies to give its site a try — major corporations with hefty legal budgets, including TRW Inc., the DaimlerChrysler Corp., Hartford Insurance, the Chevron Corp., and the Oracle Corp. “The reality is when a corporation asks a law firm to register, they will,” Henry says. DOT-COM COMPETITION ELawForum is not the only B2B exchange seeking a piece of the nation’s $100 billion market for professional legal services. Legal consulting firm Altman Weil Inc. is building a similar site called ibidlaw.com. Locally, two former associates with Paul, Weiss, Rifkind, Wharton & Garrison launched firmseek.com a year ago. Although the field may be increasingly crowded, Henry has a pattern for turning unlikely ideas into profit. “I wouldn’t want to compete against me,” Henry says with a laugh, sitting in his Georgetown office and surrounded by a staggering collection of metal sculptures from Africa. A onetime staffer on the Senate Foreign Relations Committee, Henry founded his first company, Crops Genetics International, in 1981, while an associate at Cadwalader. The Maryland-based firm specializing in bioengineered pesticide went public in 1987 and was sold in 1994 for $11.4 million. But the venture that eLawForum really calls to mind is Henry’s second company, Clean Air Capital Markets, where he built a marketplace for the sale of so-called pollution credits. “Who would ever have thought you could take acid rain and create buyers and sellers?” Henry says. “It makes an online exchange for legal services sound elementary.” His most recent company, an online clearinghouse for the deregulated electric utility industry, was sold in 1998. “John is someone who can immediately grasp the possibility of an idea and how to turn it into a business,” says Kay Ellen Consolver, eLawForum’s chief operating officer. POST HASTE The site itself basically works as a screening mechanism for corporations seeking outside counsel. In-house lawyers post requests for proposals on the site and then take bids from law firms over the Internet. The company determines which firms are asked to respond to the RFP, often a combination of new and incumbent firms. For general counsel looking to broaden their pool of law firms, eLawForum will research and recommend additional firms. After narrowing the field on price and qualifications, eLawForum recommends a face-to-face meeting to select among the final firms. Once a match is made, eLawForum charges the company two percent of its legal fee, which the company pays along with its bills to the law firm. “What we really have here is a tool for the company to use. Companies can shape it to their particular needs,” says Gillespie. So far, however, eLawForum seems to be the subject of more conversation than actual use among general counsel. “My sense is there’s less than overwhelming support,” says Bell South GC Charles Morgan, who chairs an ABA forum for general counsel. “That’s not to say it can’t catch on and grow.” According to Consolver, eLawForum has completed approximately a dozen RFPs in the past six months and has an additional six in process. But the pace is picking up, she says. “The way I look at our growth projection. I’d say by the end of the year we will have done more than 100.” Jeffrey Carr, associate general counsel of the FMC Corp., has perhaps the most unusual RFP in play on eLawForum. Carr, who is using the site to secure an outside firm to defend the company in intellectual property litigation, hopes eLawForum will stimulate a bidding war that will force law firms to deliver their services more efficiently. Carr began with a pool of approximately 30 law firms selected with the help of eLawForum. Of the 30 firms solicited, Carr says two were conflicted out, and 14 failed to respond to initial screening questions. The remaining firms will be asked to provide more detailed information on how they would approach and staff the case. “Then we go to the auction model,” Carr says. By mid-October, Carr plans to narrow his choices down to no more than five firms, which he will then ask to bid on the work. The firms’ bids will be posted — most likely anonymously — and participants will have an opportunity to revise their prices. “What I’m trying to do is encourage firms to run their business as efficiently as FMC runs ours,” Carr says. “One of my motivations in using eLawForum is to push billing procedures that accomplish those goals.” He concedes that his unconventional approach has its risks. “This experiment may horribly fail. I may not get any firms that want to play,” he says. Like most corporations experimenting with eLawForum, FMC was persuaded to register by a member of eLawForum’s advisory board. Patrick Head, a former FMC general counsel, chairs the 19-member board of retired GCs — which includes alumni of ITT Industries Inc., TRW Inc., Kraft Foods Inc., the General Dynamics Corp., Johnson & Johnson, and PepsiCo Inc. The board, Gillespie says, will be eLawForum’s crucial advantage in penetrating a difficult and increasingly competitive market. “It allows us to get in the door at the decision-making level,” he says. “Most of the time we’re talking to people who are our peers.” Ironically, Gillespie has not convinced his own law firm, New York-based Skadden, Arps, Slate, Meagher & Flom, to register with the site. According to Sally Feldman, firm director of marketing and communications, Skadden is not among the more than 500 law firms registered on eLawForum. “If a client approached us directly and asked us to respond through eLawForum, we probably would,” says Skadden managing partner Earle Yaffa. But Yaffa calls the idea unlikely, adding, “We think the kinds of projects we get called in on are of critical concern to management, the type where more face-to-face communication would be necessary,” he says. Users agree that eLawForum is most appealing for certain types of assignments, so-called commodity work such as low-stakes litigation. “There will be some matters, specifically issues that have a lot of genealogy with your company, where people will be more comfortable with their old law firms,” says Woods Abbott, legal administrator of the Lexington, Mass.-based Raytheon Co. Still, Abbott says that he plans to encourage in-house lawyers to use eLawForum for some types of routine matters. If satisfied with the results, he estimates that his company may auction up to $1 million of work on the site per year. “This would be perfect for labor,” he says. “We do work in just about every state, and a lot of times we’ve got to jump on Martindale-Hubbell, which is really no better than looking in a phone book.”

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