Teva Chief Legal Officer Seeks to Reduce Outside Counsel Spend
CLO David Stark is looking for a few good firms to handle more than $100 million in external legal spend at a significantly reduced cost—and not everyone is happy about it.
May 10, 2019 at 04:53 PM
4 minute read
Teva Pharmaceutical Industries chief legal officer David Stark is looking for a few good firms to handle more than $100 million in external legal spend at a significantly reduced cost—and not everyone is happy about it.
Stark is in the midst of whittling down the “hundreds” of outside firms Teva uses across litigation, regulatory and corporate work, looking to get as “close to one” firm as possible to handle about 80% of the firm's material legal spend. Trevor Faure, former global general counsel of Ernst & Young and the CEO of Smarter Law Solutions, is assisting Teva in the process.
As Teva looks to improve profitability generally, Stark is also looking at how his department can be more efficient. Stark and his team have sent out requests for proposals to 80 firms; some of which the company has worked with before and others it thinks can meet its new requirements that focus largely on firms with a global reach and diverse practice mix.
The main goal is to achieve significant discounts, though Stark wouldn't put a number on it. But he did offer a hint.
“It would be nice if all the firms we currently work with suddenly drop their rates by 30%,” Stark said, noting that would never happen on its own. “We're going to get some bigger discounts than we get now.”
Teva will continue to use firms for a portion of its work that is already being handled at a very low rate. And Stark says he hopes many of his current firms will be in the mix. But he also said the legal market is in the midst of an evolution and the “hungry” firms may win out. He just doesn't see the value in some of the rates he sees in the market.
“Growth rates of law firms are far exceeding the growth rates of the pharmaceutical industry,” Stark noted disappointingly.
Stark isn't shy about saying this is focused on pure discounts. He said he is not interested in alternative fee arrangements.
“I've never been a big fan of alternative fee agreements,” Stark said. “We have very few. I'm a big fan of getting a reasonable rate for quality work.”
But the definition of reasonable is where things get tricky. Stark said some of his existing outside counsel are “not happy” and “don't like [the process] at all.” In fact, some have chosen not to participate. Others, particularly those with chief pricing officers or chief financial officers, understand this is where the world is headed, he said.
Once the proposal process is submitted the list will be shortened based on data and cost. Teva will then do qualitative research and interviews to get to a smaller panel of firms, all with the goal of having a final panel by the end of the year. Stark did not say how many firms he hopes to impanel, however, he would like to get as close to one firm if possible.
While oftentimes in-house leaders want their law firms to offer innovative technology Stark said “this isn't a big technology grab.” Teva, he said, would rather have the firms that are ultimately selected learn to interface with the technology Teva has in-house.
At the same time he is looking at convergence of outside counsel, Stark also isn't opposed to disaggregation of services. He said he has extracted the work he thinks deserves higher rates and uses vendors for other elements.
Not all law firms that work with Teva are on the chopping block. Stark said there are some smaller firms that do niche work at low rates and those firms will remain on the panel.
“It wouldn't be smart to move some work to another firm that is more of an unknown for the same or a greater cost,” Stark said. “We're not consolidating just for the sake of consolidating.”
This is not the first step Stark has taken to help Teva's bottom line. After Kåre Schultz took over as CEO in November 2017, the company went through a series of layoffs that resulted in 56,000 employees being laid off worldwide. The in-house legal department was not immune to those cuts. In 2018, Stark reduced the size of his legal department from 400 to 240 lawyers and staff. On Thursday, Stark said he now has around 200 lawyers and staff working in the legal department.
ALM Editor-in-Chief of Legal Global Brands Gina Passarella contributed to this story.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllBaker Botts' Biopharma Client Sues Former In-House Attorney, Others Alleging Extortion Scheme
Fatal Shooting of CEO Sets Off Scramble to Reassess Executive Security
5 minute readFTC Lauds Withdrawal of Proposed Indiana Hospitals Merger After Leaning on State Regulators
4 minute readHealth Care Giants Sue FTC, Allege Lina Khan Using Loaded Process to Vilify Pharmacy Benefit Managers
3 minute readTrending Stories
- 1What Does Ohio Supreme Court's Opioid Decision Mean for Public Nuisance Claims?
- 2Bucking Industry Trend, Sidley Austin Elects Biggest Class of Partners in Firm History
- 3US Judge Throws Out Sale of Infowars to The Onion. But That's Not the End of the Road for Sandy Hook Families
- 4‘Really Deflating’: Judges React to Biden Threat to Veto New Judgeships Bill
- 53 Incidents Lead to Charges Against the Alexander Brothers; Cousin Remains at Large
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250