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Late last year, the legal department of Motorola Inc. decided to clean house. The company had relied on 100 firms — about 65 for intellectual property matters alone. Jonathan Retsky, vice president and director of patent operations, oversaw the review of IP firms. “We wanted to stick with the firms that we had the best relationships with,” he says. “Also, as we consolidate more work in fewer firms, we were hoping to get more volume discounts.” Six months and many comparison-shopping exercises later, Retsky and his team had pared down their list to a more manageable 20 to 25 firms, including Fish & Neave, Chicago’s Kirkland & Ellis, and a few former Motorola employees now practicing on their own. The firms that made the cut offer “good work and competitive prices,” Retsky says. And the key to good work, Retsky adds, is experience. Across the board, in-house lawyers are looking for experience above all else when they hire outside counsel. Chicago’s McDermott Will & Emery, for example, recently picked up some patent litigation work from Motorola because of its prior work with the International Trade Commission. Art DeBaugh, chief counsel for intellectual property at Sara Lee Corp., agrees. “We are not inclined to train outside counsel,” he says. Sara Lee has used Atlanta’s Kilpatrick Stockton for patent prosecution for more than 10 years. The company also retains North Carolina’s Womble Carlyle for trademark and other IP matters. For e-commerce the company uses Sidley Austin Brown & Wood. Pharmaceutical giant Johnson & Johnson has been turning to New York’s Patterson, Belknap, Webb & Tyler for patent prosecution and litigation for more than 20 years. Philip Johnson, J&J’s chief patent counsel, says that Patterson Belknap partner Gregory Diskant has been a lifesaver in case after case. In 1991, for example, Diskant won an injunction barring Bristol-Meyers Squibb Co. from broadcasting ads saying that Excedrin painkiller relieved pain more effectively than Johnson & Johnson’s Extra-Strength Tylenol. He also won more than $300 million in the 1990s for Johnson & Johnson in two patent infringement cases involving the drug Procrit. “Having Greg on our cases makes a big difference to us,” says Johnson. Knowledge is also a powerful selling tool. Prospective firms “don’t have to be able to design a semiconductor, but they should be able to understand it,” says Peter Detkin, Intel Corp.’s vice president and assistant general counsel. Intel retained New York’s Weil, Gotshal & Manges when TechSearch claimed that Intel’s Pentium chips infringed on a patent it had bought from International Meta Systems Inc., a defunct chip designer. TechSearch sued Intel and sought damages of $2 billion to $7 billion. Matthew Powers of the Menlo Park, Calif., office of Weil Gotshal won on summary judgment in the Northern District of California. The ruling was upheld in April by the U.S. Court of Appeals for the Federal Circuit. “We chose Weil Gotshal because we felt that they would best be able to explain this complex technology to the court,” Detkin says. “I didn’t think the TechSearch case would be a high-document case requiring tons of associates and discovery management. Instead, I wanted to ensure that I would receive critical thinking at high levels for sustained periods of time.” Detkin says that firms must be willing to subject themselves to the company’s hands-on style. Many of Intel’s in-house legal staff were partners at litigation firms before going inside. During a case, they meet regularly with outside counsel to discuss case strategy and tactics. Intel also has a team of paralegals who intimately know the company’s documents and engineers, says Detkin. “We handle many discovery issues ourselves — working closely with outside counsel, of course,” Detkin says. Any firm that wants Intel’s business needs to be prepared for that. “We’re not for everybody, and everybody’s not for us,” Detkin says. “All the firms [we use] are those that we have found work well with our style.” When Lockheed Martin Corp. had to battle a cybersquatter, the company’s GC, Patrick Hogan, hired Los Angeles’ Quinn Emanuel Urquhart Oliver & Hedges. The company wanted to secure the domain lockheedmartin.org from the defendant. The case went to a WIPO arbitration panel, and Lockheed won. “One of [Quinn's] areas of expertise is Internet law, including domain names,” says Hogan. For some general counsel, experience is necessary but not enough. Mark Chandler, vice president-legal services and general counsel at Cisco Systems Inc., wants alignment. “A firm needs to show that it needs to win as much as we do — that the key members of the team are willing to establish an alignment that makes them a virtual extension of the in-house legal department,” he says. He also wants “people who think of ways to resolve disputes or protect our intellectual property which may not have been explored previously.” Chandler says that Weil Gotshal; Houston’s Baker Botts; and Mountain View, Calif.’s Beyer, Weaver & Thomas all excel in this area. All three are quick to use the Web and other modern network tools to handle case management, document preparation and communication, says Chandler. After experience and alignment, alternative billing arrangements is a quality general counsel often desire. Retsky says Motorola uses a fixed-fee formula for patent preparation and prosecution and a bonus system for patent litigation. For instance, if a firm estimates it will cost $1 million to take a case through trial, Retsky might offer a flat $800,000 if it goes to trial and Motorola loses. But if the firm wins, it gets the full $1 million plus a bonus of maybe 20 to 30 percent. Luck, timing and location are the final pieces of the puzzle. This is how Johnson & Johnson retained Darby & Darby, J&J’s other main IP firm. Phil Johnson had battled the firm (while he himself was Johnson & Johnson’s outside counsel) and had been impressed. When he went in-house, he hired his former adversary. Being in the right place at the right time can’t hurt, either. Motorola usually uses Chicago’s Kirkland & Ellis and Fish & Neave for litigation, but has lately started branching out based on the company’s regional needs. Texas cases get Texas lawyers, says Retsky. For example, the Houston office of Fulbright & Jaworski is handling some of Motorola’s patent litigation. Retsky, who went to law school in Texas, says, “You need to know your audience.” And that might not only be the key to wooing a jury, but to wooing general counsel as well.

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