More Corporate Law Departments Turn to Legal Support Services to Reduce Excessive Fees

ACC Value Champion Program Reveals Latest Trends in Alternative Fee Arrangements

Posted: Jun 19, 2013

WASHINGTON (June 19, 2013) – General counsel are restructuring the balance of projects they outsource versus those they maintain in-house, pursuing long-term partnerships with choice law firms and looking at new ways to share costs in multi-party litigation, according to the Association of Corporate Counsel (ACC) 2013 “ACC Value Champion” initiative. ACC today announced its 12 winners, those legal departments and in-house counsel/law firm client service models implementing innovative strategies that deliver results while keeping efficiency high and costs low.

Among the winners, who are honored as part of the ACC Value Challenge— which promotes adoption of management practices that enhance the value of legal service spending, such as value-based billing arrangements — the majority made strategic outsourcing and insourcing decisions. This included employing legal process outsourcing (LPO) partners for high-volume legal matters in tandem with insourcing more complex, strategic work. Achieving the right balance was key to time and cost savings, with some of the Champions noting that their corporate law departments have moved 50 to 80 percent of their arrangements with outside counsel to value-based fees.

“The ACC 2013 Value Champions send a powerful message about what general counsel value most in law firms,” said Veta T. Richardson, President & CEO of ACC. “It demonstrates that the in-house legal community increasingly demands value-based fee structures that create alignment of objectives and incentivize more effective use of resources. The legal marketplace is changing and more and more corporate lawyers around the world are both driving efficiency in their own departments and moving beyond the billable hour.”

Although corporate law departments that seek to reduce spending often start with high-volume legal matters, such as contract work, this year’s winners have used value-based fee structures in class action and joint defendant cases. In one instance, 13 in-house law departments pooled resources in joint defense litigation, using an innovative approach to sharing the costs. In-house legal departments have used alternative fee arrangements to achieve better results in lawsuits, determining that with this pricing structure, litigation can prove less costly than settlements.

Across the board, the winners also deployed cutting-edge and often proprietary technology platforms to provide analytics in order to make well-informed decisions on resource allocation and to control costs. This year’s Champions also noted that they preferred to return to the same outside counsel, which helped cultivate strong relationships and promote the use of value-based fee arrangements.

ACC recognizes the following 2013 ACC Value Champions for making great strides in controlling legal costs:

  •  ACEA SpA(Italy) While improving the legal department’s reputation for internal client service, achieved 100 percent budget predictability and 31 percent decrease in lawyers’ fees via a legal work risk assessment platform and implementation of outcome-based fees for external counsel.
  • Bank of America Moved to alternative fee arrangements (AFAs) for more than 80 percent of their litigation docket and centralized defense litigation work with 30 firms, down from hundreds. Its client/panel collaboration model improved results, including in the expensive e-discovery arena.
  • BT Global(U.K.) Shifted 30 percent of legal work requests to a legal process outsourcing (LPO) provider for end-to-end handling, freeing inside counsel for high-value projects. Also employed a “legal front door” triage system and moved experienced lawyers closer to company growth markets.
  • China State Construction Engineering Corporation(Dubai) Insourced all contract work, gained efficiency with technology and employed new law firm management practices. The company uses fixed fees with success bonuses for outside counsel, a switch that enhanced recoveries by 60 percent and saved 50 percent on external legal fees in 2012.
  • Healthcare Insurance Reciprocal of Canada (HIROC) with Borden Ladner Gervais(Canada) HIROC negotiated a six-year partnership with Canada’s largest law firm, Borden Ladner Gervais, in 2011, based entirely on value-based fee arrangements. The agreement includes a set base price combined with a performance fee, while making adjustments for insourcing over time.
  • “Hot Fuel Litigation” with Shook, Hardy & Bacon 13 defendants including 7-Eleven, Circle K, Marathon Petroleum, QuikTrip and Kum&Go teamed up to share costs and collaborate on strategy to achieve a favorable ruling in high-profile multi-district litigation. Defendants who decided to bear legal costs alone settled prior to trial.
  • Marsh & McLennan Companies Reduced outside legal spend by 56 percent over four years — a time period including international growth and acquisitions for the company. Implemented a preferred provider program using AFAs with partner firms, while also focusing on internal efficiency through technology implementation, data analysis and benchmarking.
  • Mondelez International with Axiom Saved millions in legal costs related to ensuring the integrity of all contracts during the company’s spinoff of its North American grocery business through fixed-fee billing methods supported by carefully crafted workflows and playbooks. Both companies took away a better contract management system/database for long-term use.
  • NetApp Implemented a multi-faceted plan that included new technology, a focus on analytics and dashboards, employing value-based fees and leveraging vendor relationships to exponentially increase efficiency and cost-effectiveness. Improved cycle times by 350 percent in one legal work area.
  • Nike with Seyfarth Shaw Dramatically improved efficiency and cost-effectiveness with a formal, technology-driven process to select the right legal provider for each project. Reduced contracts turnaround time from 15+ to 2.6 days, an 83 percent increase in efficiency, while freeing up in-house counsel for more sophisticated work.
  • Office Depot Reached a tipping point, with more than half of external legal spend now under value-based fees,and reduced outside legal spend by 30 percent over three years by consolidating portfolios with preferred firms under AFAs. The company also assembles joint defense groups to handle patent troll litigation using AFAs, which has saved approximately 65 percent in legal fees.
  • United Technologies Corporation With relentless focus, UTC hasmoved 70 percent of external legal spending to fixed fee arrangements. The company implements this strategy globally, and in addition to lower costs, has enjoyed better partnerships with its firms.

ACC Value Champions were selected from a group of 75 nominations submitted between December 2012 and February 2013. To learn more about the Champions and their success stories, please visit www.acc.com/valuechampions.

About the ACC Value Challenge: The ACC Value Challenge, launched in 2008, has provided resources and training for in-house counsel and law firm lawyers to help affect change within the legal industry. By re-aligning relationships and promoting value-based fee arrangements and other management tactics, such as project management, process improvement, efficient use of technology and knowledge management tools, the market for the delivery of legal services benefits from the same insights and wisdom upon which every other service industry relies to provide world-class value to their clients. For more information, visit www.acc.com/valuechallenge.

About ACC:The Association of Corporate Counsel (ACC) is a global bar association that promotes the professional and business interests of in-house counsel through information, education, networking opportunities and advocacyinitiatives. The association, which is celebrating its 30th anniversary, has over 30,000 members employed by over 10,000 organizations in more than 75 countries. ACC connects its members to the people and resources necessary for personal and professional growth. For more information, visit www.acc.comand follow ACC on Twitter http://twitter.com/ACCinhouse. By in-house counsel, for in-house counsel.®

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