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Under former chairman John “Jack” Welch, the General Electric Co. led a revolution in the way corporations hired outside law firms. The company’s widely emulated policies, which stress cost and efficiency in choosing counsel, have since caused many lawyers to lament the passing of cozy, personal lawyer-client relationships. But Welch, who retired from GE in 2001, last week spoke out strongly in favor of one of his old lawyer-client relationships. In an affidavit filed Friday in support of Winston & Strawn partner Anthony F. LoFrisco, Welch called the attorney “the crucial player in the relationship between GE and Winston & Strawn.” “I have known Mr. LoFrisco for over 25 years, and have always had enormous confidence in his judgment, legal ability, and dedication to his clients’ interests,” said Welch. “During the time that I headed GE, Mr. LoFrisco served an extremely important role as outside counsel for GE and its subsidiaries.” The affidavit of Welch is ammunition in LoFrisco’s lawsuit against his firm. The 73-year-old New York partner is suing Chicago-based Winston & Strawn for millions of dollars, claiming the firm’s management breached an agreement with him that would have allowed him to avoid “decompression,” the process by which most partners’ compensation was reduced every year after reaching age 65. The suit, in which LoFrisco filed for summary judgment Friday, has called attention to the disputes that can arise between senior partners who want to maintain their positions and compensation and the firms that would often prefer to phase them out. Many firms have been willing to waive mandatory retirement or similar policies for older partners still responsible for a large amount of business. Owing in large part to the billing credit he received for his firm’s GE work, LoFrisco had long been one of the highest-paid partners at Winston & Strawn, which he joined laterally in 1991 from the now-defunct Olwine, Connelly, Chase, O’Donnell & Weyher. But decompression lowered LoFrisco’s compensation from $2.3 million in 2002 to $350,000 in 2004. LoFrisco, who first sued in 2003, is represented by Michael Carlinsky of Quinn Emanuel Urquhart Oliver & Hedges. Carlinsky Monday declined to comment on the case. Winston & Strawn’s attorney, Philip Forlenza of Patterson, Belknap, Webb & Tyler, did not return a call seeking comment. But, according to court papers, all parties agree LoFrisco had a special arrangement regarding his compensation. The firm claims this arrangement ended in 2001, though the firm retained discretion to pay LoFrisco more if it saw fit. LoFrisco claims the firm agreed to abide by the arrangement’s compensation formula on a year-to-year basis, depending on his amount of origination. Among the issues in the case is how much credit LoFrisco deserves for Winston & Strawn’s relationship with GE. Welch suggests in his affidavit that, without LoFrisco, there would be no relationship at all. “I was not familiar with the firm of Winston & Strawn until Mr. LoFrisco became a partner of the firm in 1991,” Welch said. “However, because of the prior relationship that GE and I had enjoyed with Mr. LoFrisco, and the extremely high regard in which we held him, I trusted Winston & Strawn to do legal work for GE under Mr. LoFrisco’s leadership supervision.” In the affidavit, Welch also praised LoFrisco’s “candid ‘no nonsense’ advice, his tough-mindedness and his single-minded passion in advancing our cause.” He noted that LoFrisco also introduced GE to other Winston & Strawn partners, including litigator Dan Webb. Welch said he also sought LoFrisco’s advice on his 2002 divorce, on which Webb and other Winston & Strawn lawyers ultimately worked. “Once again, [Mr. LoFrisco] vindicated my trust and confidence in him,” Welch wrote in his affidavit. ‘RESERVE AUCTIONS’ The close, personal relationship between the former GE chairman and LoFrisco may come as a surprise to some in the legal profession who have grown more accustomed to an impersonal approach by the company. GE has pioneered the use of online “reverse auctions” to get major firms to bid for legal work at the company. In a 2003 letter outlining the process to firms, J. Keith Morgan, general counsel of General Electric Commercial Finance, said the company was establishing different online “competitive bidding rooms” for each area of legal expertise. “Our ultimate goal is to create a short list of approved law firms in each Competitive Bidding Room that will handle all of [GE Commercial Finance's] legal work for a two-year period starting in January 2004,” Morgan wrote ( “Now for Law Firms, Too: Competing for Business Online”, NYLJ, Nov. 6, 2003). The proposal drew some predictable groans. “[Auctions] tend to create a lowest common denominator,” one New York partner said at the time. “They don’t value relationships. They don’t value unique skill sets.” But LoFrisco claimed in his complaint that his relationships were instrumental in guiding Winston & Strawn through GE’s new policies and getting the firm named a “preferred provider” for the company. In some of its court filings, Winston & Strawn denies LoFrisco was chiefly responsible for creating the firm’s relationship with GE, but elsewhere the firm’s management acknowledges LoFrisco’s importance. In deposition testimony excerpted in court documents, Winston & Strawn managing partner James Neis said he was concerned in 2000 that LoFrisco might leave due to unhappiness with his future compensation, which could have had a “disruptive” impact on the firm’s relationship with GE. Neis said this concern influenced the firm’s decision to continue to pay LoFrisco at the same level for a year after the expiration of his original agreement. LoFrisco claims the firm dropped his compensation because of the retirement of Welch. Whatever the case may have been before 2001 and Welch’s retirement, the firm’s position is clear that GE had become “institutionalized” as a client. In 2004, 71 Winston & Strawn partners worked on GE matters for which the firm collected $16.1 million. During the same year, LoFrisco submitted 15.4 billable hours and 1,523 nonbillables, mostly spent on client development. In July 2004, Kimball Anderson, the firm’s general counsel and an executive committee member, sent LoFrisco a memo, also copied to Forlenza, stating that LoFrisco was subject to the firm’s business development policy as a “fully decompressed income partner.” “Pursuant to the Firm’s policy, business development activities and marketing expenses should be approved by, and coordinated with, Barbara Sessions, the Firm’s Director of Business Development,” Anderson wrote. “Please do not incur such expenses without her approval.” Anderson also said in the memo the firm was creating a GE/GECF Management Group, comprising LoFrisco and 10 other partners, to coordinate the firm’s relationship with GE. He said the group’s first order of business would be to consider an opportunity at GE LoFrisco had raised in a previous e-mail. “We look forward to working with you for the common good of the firm,” Anderson concluded his memo.

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