What does success look like? Sandra Leung, the general counsel at Bristol-Myers Squibb, says it’s been far easier to broach this often-delicate topic with outside counsel since her law department adopted a preferred-provider program.

Leung adopted Law Partners for Productivity — or "LP2" — in 2009, and by 2012 it had developed "a great rhythm and pace," she says. The legal team has developed closer working relationships with outside lawyers and is winning kudos for management and people skills.

Leung’s mantra? "Transparent and broad collaboration and cooperation."

"They give us feedback, both positive and constructive," says Covington & Burling’s Michael Labson, who handled most of Bristol-Myers’ regulatory matters in 2012. "There’s an open door for us to raise issues, [and if a concern arises], they’re good about not letting it fester. They put it on the table."

Bristol-Myers believes its rigorous selection process sets LP2 apart from other preferred-counsel programs. Most LP2 partners are large, international firms, chosen in part for their complementary expertise. Still, Leung says, "very few firms can provide the full complement of services at the A level. … If they say they do it, they’re not telling the truth." Thus Bristol-Myers’ version of the virtual law firm: lawyers from different firms sharing their skills and the knowledge they’ve gained on matters involving the same Bristol-Myers product.

"I like that," says Anand Agneshwar, who is co-chairman of Arnold & Porter’s Product Liability Practice Group in New York and often works as part of a Bristol-Myers virtual team. "Everyone keeps their game up. I like getting reality checks and working together." As a partner in a preferred firm, he says, the "natural healthy competition among Type-A personalities" (read: partners in law firms) is reduced, "because you’re part of the Bristol-Myers team."

Agneshwar says Leung’s virtual firms make a lot of sense. "It allows them to tap into a lot of expertise. … Companies are more and more hiring lawyers instead of law firms, and there’s no reason why they shouldn’t. … If a firm these days gets a reputation as not playing well in the sandbox, they’re not going to last," he says.

Putting high-caliber partners from multiple firms on a single matter requires extensive coordination, but Leung says the arrangements work, and it’s been worth it.

Working with a small number of firms allows Leung to negotiate rate discounts in the "vast majority" of matters. "As we evolve, fewer and fewer matters are billed on an hourly basis," she says. "This comes from trust. We build in our desired win. We build in bonuses. But there are also haircuts" — because using a small group of outside firms means sharing risk.

The cost of legal services has fallen since 2009, when Leung chose just 12 firms to handle the bulk of Bristol-Myers’ outside work. (Previously, it had used some 200 firms.) Savings are just one benefit of the program: In addition, the quality of the work has gone up.

The move to LP2 was "a real culture change," and, initially, there were "pockets of resistance," Leung says. However, "as our lawyers have seen the quality of lawyering [rise], they’ve come around." With 115 lawyers worldwide, the biopharmaceutical company has to make sure things run as smoothly as possible.

Bristol-Myers is based in New York, but when Leung became general counsel in 2006, she moved the law department to New Jersey to be near the company’s businesses. There are now 64 U.S.-based lawyers stationed in Lawrenceville, Plainsboro and New Brunswick.

Preferred-list firms accounted for 80 percent of the 2012 year’s outside legal expenditures, and Bristol-Myers was able to negotiate alternative fee arrangements in 50 percent of matters. Leung says this percentage is atypically high — and will rise "fairly substantially" by the end of the year.

Covington & Burling’s relationship with Bristol-Myers has grown "considerably" since LP2 began, and handling a wider range of issues allows the firm to work more effectively for the company, says Labson, a partner with Covington’s Food and Drug Practice in Wash., D.C. Labson says Leung has pushed hard for cost efficiency and predictability.

Arnold & Porter’s Agneshwar says the notion that preferred counsel get more work for more discounts is often honored in the breach, but not so at Bristol-Myers. Agneshwar is lead counsel in product liability litigation involving the company’s best-selling drug Plavix. "What I really admire about Bristol-Myers Squibb is that they’re really committed to their preferred client list," he says." To a person, they treat outside counsel as partners, with respect. Working with them is a total win-win."

Leung says outside counsel are selected on the basis of objective criteria rather than because "they seem like nice people." However, one of the things LP2 firms consistently say about Bristol-Myers is that they are, well, nice.

"[I] put them at the very top in terms of how they work with outside counsel," says Labson. "Sandy is impressive. She welcomes people’s views and doesn’t micromanage, while, at the same time, she gets involved herself.

"It’s kind of corny, [but] she’s very approachable. … All their lawyers — particularly their senior team — are good lawyers, easy to work with, very nice and straightforward."

Agneshwar adds that Bristol-Myers is "as easy a client as you could get: very collaborative, … very collegial."

Collaborating with Leung and her team is a challenge of the best sort, says David Fox, a partner in Kirkland & Ellis’ Corporate Practice Group in New York, who worked last year on Bristol-Myers’ complicated $7 billion purchase of Amylin Pharmaceuticals and on a related collaboration agreement with AstraZeneca.

"They have … great intellectual capability and great knowledge of their business," he says. "They are … willing to explore new ideas and innovative ideas. They are extraordinarily demanding of their law firms, and extraordinarily demanding of themselves."

Leung holds "alignment meetings" periodically with outside counsel to explain the company’s business situation and strategic plans, and to discuss performance.

"It lends some objectivity to the process," she says. "Firms have found that to be helpful … It’s really forced us to have a good dialogue." Leung also asks for feedback on how she does her job, although she says some firms have been more willing to give it than others.

Arnold & Porter’s Angeshwar, who recently attended a Bristol-Myer’s presentation, believes these meetings are "very good for us." Covington’s Labson agrees, saying Bristol-Myers does "a good job of keeping us apprised of current developments and strategic focus … so we can give better advice."

In addition, LP2 firm attorneys are sometimes seconded to Bristol-Myers, and vice versa. This helps improve the quality of legal services and, in the case of Bristol-Myers attorneys, helps expand their expertise. •