When Paul R. Berry joined Henkel Corporation as its chief legal officer in 2006, the international manufacturing company that makes and sells household products like Dial Soap and Purex detergent was using dozens of law firms as outside counsel.
With involvement in hundreds of pending lawsuits across the country, keeping track of the legal billing meant management headaches for Berry. In less than a year at the helm of the legal department for the company with $3.9 billion in U.S. sales, Berry decided it was time to consolidate the outside legal work to include just a couple of firms.
The consolidation, Berry figured, would lead to better results in the courtroom and save the company money in the long run. So that's just what he did. Berry also instituted a computerized program for keeping track of the outside counsel legal spending and productivity.
For the innovations to streamline the legal work under Berry's watch, Henkel takes the Connecticut Law Tribune's Legal Departments of the Year Award for Management of Outside Counsel.
Henkel's parent company Henkel AG&Co., is based in Germany. The U.S. subsidiary is headquartered in Rocky Hill, where 11 of the company's 125 lawyers are currently employed.
Nationwide, the Henkel legal department, backed by its outside firms, handled a fairly typical mix of litigation cases last year. Because the company produces chemical products, its legal department has been called upon to defend lawsuits ranging from product liability to toxic torts. In each of those litigation matters, outside counsel is used.
Numerous asbestos product liability lawsuits remain pending throughout the country. There are currently six lawsuits pending against Henkel in Connecticut Superior Court, all related to injuries or deaths attributed to alleged asbestos exposure from products manufactured by predecessor companies.
In one of those cases, Henkel is being represented by the Boston law firm of Centrulo LLP, which defends many asbestos-related claims in New England. Several lawsuits have also recently been pursued against Henkel over its antibacterial soap products. One of those suits, filed in California, claims a Dial soap product was misleading in its advertising.
What's somewhat unusual, Berry said, is his department has started using a request-for-proposal (RFP) process for all new outside counsel hires, rather than traditional method of using word-of-mouth referrals to find new firms. That process gives the company the most information in hand, to help it make the most informed decision about which firm to hire.
The RFP process is used for Henkel's legal outsourcing overseas as well. Amy Span Wergeles, who runs the Henkel's in-house trademark practice from Rocky Hill, said the company employ two outside firms in each of 72 countries where the company does business . The company used to use as many as 10 different firms in each country.
"We've reduced that number in the past few years," Wergeles said. "It easier to manage outside firms when you have fewer of them doing the work."
"We've found that utilizing the RFP process works really well," Berry said, "because we're able to learn a lot about prospective hires by requiring detailed responses in a firm-generated questionnaire, as well as an in-person interview."
Chris Signorello, who formerly worked for Goodwin Procter, leads the litigation efforts using outside counsel. When an outside firm is working on an important part of the case, Signorello will participate in key depositions and hearings. "He's a very good trial lawyer," Berry said. "And that experience helps him effectively manage our outside counsel litigation practice.
Signorello is also involved in the RFP process, through which the legal department has developed a short list of preferred firms. Among firms the company has worked with, is Day Pitney in Connecticut. "These firms are selected based on the expertise and value they provide in a given area," Berry said. "Where possible, we prefer to consolidate related cases with one firm so that a consistent approach is utilized. We've found consolidation is the best way for the greatest efficiencies to be achieved."
Additionally, he said, "consolidation requires fewer internal resources in terms of managing outside counsel, and also gives the company greater bargaining power when it comes to setting rates." The first step of the consolidation was to assign several hundred products liability cases pending against Henkel to a single firm, Lewis Brisbois Bisgaard & Smith.
"The consolidation of our cases to the Lewis firm has resulted in a defense cost savings of 30 percent on a per case basis," Berry said. "We're also seeing excellent results across the portfolio in terms of settlements and dismissals."
Another major Henkel initiative in the last couple of years was the creation of an electronic "matter management" system to keep track of legal spending on a case-by-case basis. Using specialized software, the system measures both the amount of time and the amount of money that Henkel is being charged for all of its legal work.
The system provides significant savings by allowing billing to be handled electronically, rather than on paper, and also lets Berry and his staff interact directly with the outside firms. The software allows Henkel legal managers to receive automatic alerts, so they are notified when each project budget nears the limit of its spending agreement.
"Another advantage of this system, is there is a direct interface," so the outside counsel can upload case updates and documents for review, Berry said.
The automated billing management system will provide the firm with cost savings, especially over time. "I think there is a constant drive for all companies to focus on value as opposed to cost," he said. "I think that will certainly continue, you will see a lot of efforts to cover the work that's needed, and keeping a level of quality at the same time. That's what's going to drive a lot of outside counsel management going forward."
Wergeles, who used to work for Robinson & Cole before joining Henkel five years ago, said the management of outside counsel is made more efficient, because of the skill level of her colleagues.
"What strikes me about this legal department, is how high functioning everyone is," she said. "Paul [Berry] has done a really good job of choosing lawyers and brining people in who function at that high level. And that's allowed us to do more in house work than we used to be able to do."•