At ACC annual meeting, counsel discuss criteria for evaluating law firms

Wal-Mart Stores Inc. plans to add evaluation of a law firm’s flextime policies to its list of criteria for evaluating outside firms, according to a panelist at the ACC annual meeting in Boston.

Joseph West, associate general counsel at Wal-Mart, said the company plans to add flextime policies to its current list of law firm measures: cost-effectiveness, performance and diversity.

West was one of eight panelists on an Oct. 20 panel covering how in-house counsel departments can get more value from the law firms they work with: “50 Ways and Counting to Drive Value into Law Firm Relationships.” 

The panel reviewed a myriad of steps in-house departments can take to focus on value, including setting guidelines for when to use outside firms; developing uniform invoice review guidelines; using templates for recurring legal matters; and using early case assessment to figure out whether to settle.

The process of establishing guidelines for when in-house lawyers can engage outside counsel “is just as important as what the guidelines say,” said Philip Crowley, an assistant general counsel at health care products maker Johnson & Johnson. “We need to tease out of lawyers a description of their best practices for their department,” Crowley said.

Johnson & Johnson developed litigation guidelines, including early case assessment within 90 days of the start of case, and generalized them for other areas. The guidelines “force the [company] lawyer to have a discussion with the outside counsel as to what it’s going to cost and how its’ going to be approached,” Crowley said.

Once corporate law departments develop templates for certain types of legal work and guidelines for using outside counsel, the next step is creating policies that require in-house lawyers to really use the systems, said Ganesh Natarajan, president and chief executive office of legal support services company Mindcrest Inc.

“It has to be clear to all the lawyers in the department that you must use this template,” Natarajan said. “Without that level of accountability, the system itself doesn’t work.”

At Hewlett-Packard Co., lawyers “are expected to manage their budgets effectively” and meet stringent goals, said deputy general counsel Kevin Light. “Even if we’re operating in budget, [the goal may be to] reduce travel by X percent or by X dollars,” Light said.

The panel also discussed ways to manage outside firms’ behavior, such as designating some work for competitive bids and crafting performance measurements systems.

Measuring outside lawyers and firms requires studying the company’s past legal spending and the outside attorneys’ past work to set a baseline, said Keith Hawk, vice president of client relations for U.S. Legal Markets at the LexisNexis Group subsidiary of Reed Elsevier PLC.

“We’ve talked so much about being able to forecast forward with metrics, but the greatest source of knowledge is to look backward,” Hawk said.

In-house lawyers at generally smaller companies met later in the day to brainstorm about ways to import the ACC Value Challenge to the smaller legal environment in a session called “Translating Big Firm/Big Department Innovation into Small Law Success.”

The panelists and participants talked about how to share risks with outside firms in alternative billing arrangements, using flat fees for projects or categories of legal services and using lower-cost alternatives such as boutiques, solos and associates.

Kenneth Grady, general counsel at shoe maker Wolverine World Wide Inc., said in-house lawyers need to figure out what’s valuable to them and structure the relationship accordingly. Grady said he’s farmed out securities work on a fixed-fee arrangement with the condition that the company have access to two key partners.

“The amount per year didn’t change, but our access to high-cost counsel increased,” Grady said.

Let outside firms know when lower-cost options work well, said Danette Wineberg, general counsel at The Timberland Co., which sells outdoor footwear and products. Wineberg said she lets the partner know when an associate assigned to a matter does a great job.

“That reinforces the value behavior if you felt you got really good quality service for what you were paying,” Wineberg said.