Constructing Legal Strategy in the New Economy: Alternative Servicing and Billing for New Value Propositions
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Constructing Legal Strategy in the New Economy: Alternative Servicing and Billing for New Value Propositions

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A roundtable dialogue with thought leader general counsels and others.

A roundtable dialogue with thought leader general counsels and others.

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    Constructing Legal Strategy in the New Economy: Alternative Servicing and Billing for New Value Propositions Constructing Legal Strategy in the New Economy: Alternative Servicing and Billing for New Value Propositions Document Transcript

    • sponsored roundtable section “Constructing Legal Strategy in the New Economy: Alternate Servicing and Billing for New Value Propositions” A roundtable discussion with Stites & Harbison and Nelson Mullins ZAchAry d. porter/dAIly report �aily �eport ALM An Incisivemedia publication
    • 2 2009 sponsored section The Panelists Michael H. Trotter Michael Veysey Jeff D. Woodward Partner Senior VP and Partner Taylor English Duma General Counsel Stites & Harbison Scientific-Atlanta Jon A.Neiditz Robin Sangston Partner VP and Associate Nelson Mullins Riley General Counsel & Scarborough Cox Communications Steven D. Cooper Moderator: Donna K. Lewis Stites & Harbison David F. Partlett Partner Dean Nelson Mullins Riley Emory School of Law & Scarborough About The Sponsor stites & Harbison is a pre-eminent law firm based in strategic Southeastern locations and sought by business and institutional clients nationwide for sophisticated transactions, difficult litigation and complex regulatory matters. Tracing its origins to 1832, Stites & Harbison is one of the oldest law practices in the nation and among the largest law firms in the region. nelson mullins riley & scarborougH offers the strength and resources of a national law firm with diverse attorneys and professional staff experienced in a broad range of issues. With a firm Southeastern base, Nelson Mullins has grown into a national firm with a strong reputation in meeting the complex litigation, corporate, securities, finance, employment, regulatory and other needs for clients ranging from private individuals to large businesses, including many publicly held companies.
    • 2009 3 sponsored section “Constructing Legal Strategy in the New Economy: Alternate Servicing and Billing for New Value Propositions” T he Daily Re p ort an d th e law firm s have in the past, and the need for law schools robin Sangston is vice president and associ- Stites & Harbison and Nelson to be much more responsive in their curriculum ate general counsel of cox communications. Mullins Riley & Scarborouth recently than they have been previously. It is amazing She joined cox when it was rather small, the convened a roundtable to discuss how to consider that harvard law School adopted fourth attorney, I’m told. She has managed a outside counsel can work with in-house a curriculum back in the late 19th century that host of matters there and remains very active in counsel to provide optimum value in has persisted for over a hundred years. that the community activities. robin will be address- the current economy. The discussion, was the model curriculum for the entire legal ing the changing legal landscape. moderated by Emory Law School Dean education world. recently we have begun to donna lewis is a partner at Nelson Mullins. I David F. Partlett, covered a range of topics see changes. At emory, for example, we have want to note first and foremost that we are very that touched on how the law firm and just adopted a new curriculum. there will be proud of her because she is an emory gradu- in-house business models are evolving in much more emphasis on transactional law than ate, and she served on the emory law Journal a changing economy. Panelists included there ever has been before. there will be a first- as managing editor. donna has had a distin- Stites & Harbison attorneys Jeff D. year course in business law. guished career focusing on strategic commer- Woodward and Steven D. Cooper, Nelson let me just introduce very briefly our distin- cial transactions, the majority of which involved Mullins attorneys Jon A. Neiditz and Donna guished speakers. Michael trotter is a partner technology, context, data and other intellectual K. Lewis, Taylor Engllish Duma attorney in the Atlanta law firm of taylor english duma property. Michael H. Trotter, Cox Communications and has practiced corporate and securities and Jon Neiditz is a fellow partner at Nelson Mull- vice president and associate general business finance law since 1962. he graduated ins. he founded the firm’s Information Manage- counsel Robin Sangston and Scientific- from harvard law School in 1962. I am pleased ment practice, which focuses on information Atlanta senior vice president and general to say that he has taught law at emory. he is risks and opportunities in areas such as data counsel Michael Veysey. Their remarks in the securities regulation area. thus, he has security and privacy, records management follow. contributed to “the harvard of the South” very and e-discovery. he is a graduate of yale law. nicely. he has written very broadly and is par- Jeff Woodward is a member of the Business & Jon a. neiditZ: In the legal profession now, ticularly thoughtful in this futuristic aspect of Finance Service Group in the Atlanta office of one hears so much about the changes and writing. his 1997 book, “profit and the practice Stites & harbison. he has been a partner since the dire consequences of the changes that are of law— What’s happened to the legal profes- 2008. affecting the profession, but it’s really a tre- sion,” was very well received. And he has con- micHael H. trotter: you’ll all find a pack- mendous opportunity to hit the reset button. tinued that writing more recently in 2007 with age of materials that the daily report has put there’s no one with the finger on the reset but- “A pig in a poke? the Uncertain Advantages of together for you here. It includes four papers ton as much as in-house counsel. Very large and highly leveraged law Firms in that I have written, one on the transforma- this is a session generally about achieving America.” It is always heartening for an educa- tion of legal services in the legal commodities, much more with much less by doing things dif- tor to see a lawyer stay close to his alma mater, which was published by the daily report last ferently. and Michael has stayed close to Brown where fall. the second one is a chapter from a “pig in a It’s a real pleasure and honor to have dean he has been a trustee. the next speaker will be poke?,” which was published by the American david partlett of emory law School here to Michael Veysey, who is now with cisco Systems, Bar Association in ‘67. And a book titled “raise coordinate this panel. which before the takeover by cisco Scientific- the Bar—real World Solutions for a troubled dean daVid F. partlett: yesterday I was at Atlanta was of course, Scientific-Atlanta. he is profession.” And then there is the piece that the Supreme court with all the morning coats senior vice president and general counsel and launched my career, as modest as it has been, and all of the ritual involved, all very significant corporate secretary of cisco Systems. In that as a legal futurist, which was a speech to the for the rule of law. less than 24 hours later, here position and in earlier positions in the corpo- corporate counsel section of the State Bar in I am talking about this dynamic interaction rate area, Michael had vast experience, par- 1990 that was published verbatim in the daily between the corporate sector law firms and, of ticularly in the practice of corporate law in the report. And in looking back over it last night, course, you can’t leave out the law schools. And multinational context. I thought well, we finally had gotten there. It that is really my great concern these days. Steve cooper is from one of the sponsor firms, took 20 years for the things I was concerned let me say from the point of view of law Stites & harbison. he will address the modern about to finally bite hard, but here they are. And schools, that I was on a panel just last week issue of paperless electronic document man- finally, there’s a short piece called “the road to with two other law school deans, and we talked agement systems. Before joining Stites & har- oblivion,” which really deals with the impact of about changes in legal education. We are going bison, Steve was senior vice president and vice continuing increases in first-year compensation to see tremendous changes in legal education president of the electrolux corp. he too has in law firms. as a result of what is happening in the world. served his alma mater well. We were just dis- I think there are five key developments that We are seeing the forces now in terms of our cussing his involvement with columbia Univer- are driving the restructuring of the legal profes- students’ not finding employment the way they sity over the years. sion and legal services. they are competition,
    • 4 2009 sponsored section cost, corporate counsel, modernization and grown and how the cost and leveraging and so technology. Sixty years ago, there were 22,000 forth have increased, “the profit and the prac- lawyers in America, that was one for every 695 tice of law” is still available at Amazon.com and Americans. today there are 1,162,000 lawyers I think you might find it interesting. in America, and that’s one for every 261 Ameri- there are three other important factors that cans. that is more than a 400 percent increase in are contributing to the restructuring: corporate the number of lawyers on a population growth counsel, modernization and technology. Why that has been less than a hundred percent. So do I say corporate counsel? corporate counsel we have a lot more lawyers than we used to and virtually did not exist in 1960 in Atlanta. coke there are many more relative to the population. had a general counsel. Southern Bell had a legal Not only do we have more, but they’re much department. When I started at the Alston firm better educated. It’s attributed in part to our in 1962, it did not have a single client for whom law schools that have gotten much better and it was principle counsel that had an in-house also to continuing legal education programs lawyer. that included the citizens & Southern that have expanded tremendously, and they’re National Bank, which was the largest bank in the far more books, law reviews, legal newsletters southeastern United States, and also included and the like available to all of us. So we have Genuine parts co. and Magic chef, a Fortune michael H. trotter the largest, smartest and most competitive 500 company. It included the cotton producers Partner and competent bar we’ve ever had. And that Association, which was the second- or third- has led to a tremendous amount of competi- largest agricultural cooperative in the country, Taylor English Duma tion between law firms for business that’s avail- and there was not a single in-house lawyer for able. higher costs are the next factor and the any of those companies. there were fewer legal Michael H. Trotter, a partner in the Atlanta costs are not only because there’s more legal departments than in-house general counsel. law firm of Taylor English Duma LLP, has work, but because the cost per unit has gone the in-house lawyer was very often one person, practiced corporate, securities and business up tremendously. Inflation since 1960 based on always a guy in those days. And his job was to finance law since 1962. A graduate of the consumer price Index has been 640 per- select and coordinate outside counsel. he did Harvard Law School, Trotter has taught cent. the hourly rates charged have probably not give legal advice to his client to speak of and securities regulation at Emory University exceeded and grown in excess of inflation by a didn’t supervise other in-house lawyers. Law School, as well as courses in law firm management and economics. He hundred percent or more. And a great deal of In today’s corporate world, general counsel frequently writes columns for the Daily leverage has been built into the system that did are very different folks. they are seasoned pro- Report, and his writing also has appeared not exist in 1960. fessionals who are smart, focused and practi- in the American Bar Association Journal, If you look at “pig in a poke?,” you will see the cal. they know how much particular services the National Law Journal and the Georgia associate-partner ratios in many of the major should cost, and they’re knowledgeable and Journal of Southern Legal History. firms starting in 1950. I got this information out astute purchasers of legal services. And they His book, “Profit and the Practice of Law— of Martindale-hubbell. the New york firms, for also know how many good lawyers in law firms What’s Happened to the Legal Profession,” the most part, not all, but for the most part, did are out there and how anxious they are to have was published by the University of Georgia not mention or disclose their associates in 1950. your business. Press in 1997. It is widely recognized as the they did not list them. So it is not possible to the fourth factor in the restructuring has been definitive work on growth and change in look there and find out how many associates commoditization and I won’t go into any details the legal profession in America from 1960 they had except for the few firms that did dis- there, but the article from the daily report spells through 1995. He is also the author of “A close that information. one of which was Skad- it out. how much of the work performed by Am Pig in a Poke? The Uncertain Advantages of den Arps, and I think they had two associates law 200 firms are commodities these days? In Very Large and Highly Leveraged Law Firms and four partners. a recent article in the chicago lawyer, home in America” that appeared as a chapter in And, of course, we’ve created all these billing commoditization, the general counsel of FMc “Raise the Bar—Real World Solutions for categories that didn’t exist in 1960. legal assis- technology is quoted as saying, “85 percent of a Troubled Profession,” published by the tants did not exist. We did not have non-equity the matters any competent attorney could do. American Bar Association Press in 2007 after partners. We didn’t have contract partners. We Another 15 percent requires more sophisticated a yearlong effort of the Litigation Section of didn’t have investigators. We didn’t have docket skills.” My own estimate is that 60 percent to 80 the ABA to address working conditions in managers. We didn’t have case managers and percent of the legal work can properly be clas- the profession. so forth. the gross revenues in 1986 of the Am sified as a commodity. Trotter has served as the principal securities law 100 were $7.2 billion. Adjusted for infla- last but not least, technology includes copi- lawyer for more than 18 public companies. tion, that would have been $13.24 billion. In ers, scanners, computer software programs, He has represented borrowers in debt 2006, the gross revenues were $56-plus billion, the Internet, none of which existed. there were financings ranging in amounts up to $525 an increase of about 328 percent in real dol- copiers in 1960, but nothing else. So it’s been a million and he has represented acquirers and sellers of business of many different lars. of course, most Am law 100’s are bigger world of change, and it has enabled these other sizes and types. today than they were in 1986, and that’s part changes to take place. of it. you also have to remember, however, that I want to mention briefly a book that you fewer companies had large legal departments should all be familiar with, “the end of law- in 1986, and those that had them, have larger yers?” there’s a question mark at the end of ones now, for the most part. And if you com- that. And the conclusion is that there will be bine the expense of the legal departments, the lawyers, but they’re going to be different. this much larger legal departments with the much is by richard Susskind, who is the real futurist increased fees from the private sector, the total in the legal profession, an english lawyer who’s cost has gone up extraordinarily. written several books, all good. And he fore- If you’re interested in how the profession has sees dramatic changes in the profession over
    • 2009 5 sponsored section the next 10 to 20 years. he anticipates there will body like Morgan lewis handles all of our com- be a new interface that will emerge between mercial litigation. We have a firm that handles non-lawyers and the law because of the Inter- all of our immigration work. We have probably net and technology. Individuals will be able to two or three go-to Ip firms and these are firms find their law just like they can find their stocks, that are familiar with both cisco’s technology they can find their flights on the airplane and do and Scientific-Atlanta’s technology. probably a lot of other things. he says we will witness the our biggest risk area today is in the patent end of many lawyers as we know and recognize infringement area. We have probably 30 in the them today. And the birth of a new streamlined Ip area. And the way we’ve divided that up is we and technology-based generation of practicing have an Ip strategy team and then we have an lawyers who are fit for the purpose of the 21st Ip disputes team. And then we have an Ip litiga- century. Among the legal service providers he tion team. We try to take an early assessment of thinks who will come of age are the legal knowl- any type of patent assertion and see if we can edge engineers, legal risk managers. the law’s a resolve it, but as probably most of you know if very conservative profession, and most lawyers you’re in the technology area, today many of look backward for answers rather than to the our cases are coming from patent holding com- future. that’s what we’ve been taught to do in panies that have no business other than they law school, for the most part. Susskind notes in own patents that arguably are in our particu- michael Veysey the book a strong resistance in most major U.S. lar space. For the run-of-the-mill work, we have Senior VP and General Counsel law firms to addressing the various issues that these flat-fee agreements. those are negotiated Scientific-Atlanta he’s raised. And as he has said more than once, every year. With respect to the major pieces of it’s hard to convince a partnership full of mil- litigation, the key issues for the company, what lionaires that they’ve got their business model we do is we have a preferred provider list and Michael Veysey joined Scientific Atlanta in wrong and need to change it. I think competi- from that list, we will have so-called beauty January 2003 as senior vice president, general counsel and corporate secretary. In addition tion costs, corporate counsel commoditization contests to select an attorney and it’s typically to providing leadership and direction to and technology will continue to squeeze out- somebody that we’ve had experience with. We the company’s domestic and international side lawyers and will continue to affect dramati- do our budgets on a fiscal year basis. We get an attorneys, legal staff and outside counsel, he cally how law is practiced and we all need to annual budget from the outside firm and then also is a member of the company’s Corporate search for improvements and how this will be every quarter, about two weeks before the quar- Management Committee. done. ter, we will dialogue with the outside firm and He joined Scientific-Atlanta following 22 micHael Veysey: My topic today is budget say what do you think the spend is going to be years at Gould Electronics Inc., a subsidiary techniques for in-house counsel. I’m sure all of for the next quarter. they manage it from their of Japan Energy Corp., where he was you who are in-house have your own individual side. In my experience, the most effective tech- senior vice president, general counsel and techniques. let me tell you a little bit about my nique is getting realistic budgets from your out- corporate secretary. background. When I came to Scientific-Atlanta, it side counsel. And that’s not to say things don’t He has extensive experience managing a had approximately 30 people in the law depart- change. If you have a materially adverse change, multi-national corporate law department. ment. I’d say 16 were attorneys. Most of the you can sit down and renegotiate it. But when His areas of expertise include domestic and attorneys were here in Atlanta and then we had we get a budget, we expect the attorneys to international acquisitions and divestitures, our european headquarters in Belgium. Scientif- stay to that budget. We understand who’s going commercial and government contracts, ic-Atlanta was acquired by cisco Systems Inc. in to be on that case. We’ve had instances where criminal and civil litigation, compliance and February of 2006. We integrated the law depart- when we get the bills and somebody who has environmental proceedings. In addition, his ment very quickly. cisco has approximately 220 not been identified is that case, and we will not experience at Gould included, restructuring people in the law department worldwide. they pay for that attorney and our outside counsel and managing multiple discontinued have approximately 160 attorneys in 20 differ- know that. businesses, reducing high exposure legacy ent countries. It’s managed by Mark chandler the other thing that we’ve done, particularly liabilities and successfully recovering more who’s the general counsel. Mark has been a in this past year, is cisco worldwide has asked than $100 million in insurance recoveries. big proponent with respect to delivery of legal the corporation to cut $1.5 billion out of expens- His legal career includes judge advocate services and how you can leverage technology es. So there has been a moratorium with respect service in the Marine Corps where he to improve overall efficiency. I would agree to all travel and hiring. the only exception to the served as a certified military judge and with what Michael trotter said in terms of the hiring is if it’s a critical program. trial counsel at military courts-martial and administrative proceedings. He is a retired standardization or the commoditization of the We’ve experimented with alternative billing colonel. Prior to joining Gould, he was a work, maybe probably 60 percent to 70 percent techniques, particularly in our high-profile liti- commercial litigator in Washington with of our work is standard. our bread and butter gation. What we’ve done in the past is for the a private law firm. He attended Boston is revenue. cisco does about $40 billion a year first six months of a particular case, we’ll set College Law School. in contract revenue. that’s the life blood of the fixed fee with the outside counsel. then at the company. We have both commercial attorneys end of that six-month period, we’ll sit down with as well as contract negotiators. they have really the counsel and we’ll look at it and say, all right the lion’s share of the work. you’ve got a better view of the case now and the other major areas of cisco include a liti- you tell us where you think this case is going. gation department. We have an employment And then we set up a second fixed fee and that department. We’ve got a patent department. second fixed fee will be all the way through trial We have a securities department and corporate and all the way through appeal. And then what governance. With respect to the standard work, we do is we’ll bill into that a success fee factor. we have flat-fee agreements throughout the So if they settle the case within a certain range, world with major law firms. For example, some- they get a certain percentage. If it’s a directed
    • 6 2009 sponsored section verdict or a complete win for the defense, then outsource to contract lawyers. We have teams they get the total fee, whatever you’ve negoti- of contract lawyers set up with reliable search or ated. And then it decreases after that. outplacement firms where we know we’re get- It’s a real partnership relationship with out- ting quality folks. And those people are doing side counsel. there’s no excuse for somebody the document review at 25 cents on the dol- not to pick up the phone and tell you we’ve got lar of what it would have cost in the old days a new development on the case and we think when you had associates in law firms reviewing we’re going to run over budget. those documents. But I have a senior paralegal donna K. leWis: you know, it occurs to me managing that. I took another senior paralegal that some of what you’re saying really is about and I turned her into our law department tech- better communication at the front end of the nologist where she manages our e-bill solution, project to allow outside counsel to serve as manages all the Internet activity in the depart- an extension of your in-house department. It ment. sounded to me like you look for people who sangston: And then I have another senior understand your business so that they can add paralegal who functions under the direction value to the process. of an attorney resolving disputes, negotiating What do you think about non-attorney time- resolutions and closing them out. So I think Jeff d. Woodward keepers and their role in reducing legal costs? that law departments are getting a lot savvier Partner Veysey: We’ve used non-attorneys in terms about using the limited resources that we have for discovery and in document production. now. I have had two openings I wasn’t allowed Stites & Harbison our contract negotiators, they don’t have a law to backfill and our budgets were cut 5 percent. degree, but a lot of them are very, very experi- So I’m trying to do more with less and we have Jeff D. Woodward is a member of the enced. to be very, very creative. And I think that we’re Business & Finance Service Group in Stites & leWis: have you used legal process outsourc- never going to go back to the way it was with Harbison’s Atlanta office. His practice focuses ing? the continuing trends and more technology, on corporate general services, emphasizing Veysey: We haven’t used legal outsourcing more alternatives. privately held entities; commercial contracts and maybe it’s because of the size of our depart- steVe cooper: how do you manage the and transactions; mergers and acquisitions; ment. We’ve tried to do everything we possibly budget process? do you centralize it at your and private placements and corporate can in-house. that we have probably 15 attor- level or do you push it down to the attorneys in finance. He also represents for-profit and neys over in India that support our operations in your department to work directly with outside nonprofit clients in real estate and affordable housing transactions. India. We have over 10,000 people in India and counsel? Prior to joining Stites & Harbison, Woodward we have a whole group of lawyers just dedicat- Veysey: We set it and then we’ll look at the was a partner from 1999 to 2008 at Foltz ed to that—that business. spend. So every month I get from our finance Martin in Atlanta. Before that, he was an robin sangston: I was going to say on the people what our actuals are for that particular associate at Holland & Knight in Atlanta. He is billing guidelines, we have billing guidelines month and then when you’re going into the a graduate of Notre Dame Law School. and there’s lot of meaty stuff in there, but the next quarter. And it all rolls up from all of the Woodward is chairman of the board one thing that is relevant when you’re talk- attorneys within the department. And then (2007-present) and instructor (1987-present) ing about the communication side is each law we have actual sign-offs in terms of, say, this is of The Edge Connection, a nonprofit firm is assigned an in-house counsel contact the number that I’m committing to for this par- organization dedicated to providing and they’re not allowed to do any work and bill ticular quarter. And what we’ll do with outside microenterprise training to low- to any work on the matter unless they’re working counsel, particularly with the high-profile case, moderate-income individuals. Woodward through that in-house counsel contact. the is we’ll have a sign-off from the outside counsel was the founder and chairman of days are gone when the business person was that this is their budget for the next quarter. Community Redevelolpment, a nonprofit allowed just to pick up the phone and call the cooper: In reviewing your attorneys on an affordable housing organization, and the outside lawyer and let the clock start running. annual basis or for bonus purposes, do you hold founder and prior chairman of the Atlanta We’ve really reined that in quite a bit. And once them accountable for managing their particular Community Toolbank, a nonprofit tool and again, the economy has been very helpful in piece of the budget? materials distribution company. shifting everyone’s attention. the business peo- Veysey: probably say 10 percent of their ple used to have those long-standing relation- qualitative portion of the bonus is meeting our ships, golfing buddies, and we had a hard time budget. getting the message through to those people sangston: Very similar. I get monthly that you probably are not being as cost effec- reports, not quarterly. So every month I get to tive as you can be. And if you worked through see how we’re doing against our budget. us in house, we will help you save money and WoodWard: I wanted to talk just a little bit help you meet your budget. So we’ve had good about some of the themes and maybe just link support for that and I think the economy has them together with technology. everybody’s helped that quite a bit. looking for some sense of legal value. how on the outsourcing, I have a senior paralegal do we get value out of the time that’s spent who manages our entire e-discovery process, by outside counsel? We find that communica- which we brought in almost entirely 100 per- tion at the beginning is important, particularly cent in-house. We’ve invested in all the technol- if we’re negotiating a fixed-fee arrangement ogy. We have hired all the human resources and on a business transaction. We want to have a now we can work any e-discovery matter from very fundamental understanding of a couple of beginning to end doing everything except the things. one, what type of information does in- attorney review of the documents and that we house counsel or their staff want to have? how
    • 2009 7 sponsored section much participation, how much do they want to in the legal documents, employment agree- be in the loop on the work that’s being done? ments, employee manuals and things like that. how many people do we need to cc on and We put up a lot of that information and their who needs to know on e-mails that are going employees can have direct access to that type back and forth? And if they see more people in of information. that way, there’s no confusion a string of e-mail cites, they want to know how when there’s been a change in the employment many lawyers you have on this particular mat- manual. We found out that different companies ter. We negotiate up front who’s going to be on have a comfort level with that. All of them have a the team. do you like a large team? do you like different set of security protocols. And on price, a small team? do you want a lead contact? And it’s not only a direct lawyer cost, but long-term every in-house counsel is slightly different, but how can we create value. If in-house counsel if we don’t have this discussion in the begin- has paid good money for legal work, we want ning, we find that the cost projections can be to make sure that they get full value out of it, way off. Are you an in-house counsel that likes can go back to it and can access it easily, quickly to use paralegals? We have a team of paralegals and efficiently. we can use and bring in on a transaction and sangston: let me ask you a question, use very effectively. different in-house coun- Jeff. And this is principally for clients in small, sel have different feelings about that. So these in-house law departments or no in-house law Jon a. neiditz types of discussions in the beginning we find to departments or smaller corporations that don’t Partner be very, very fruitful. have the resources like Michael’s company? Nelson Mullins Riley one of the other pieces is how we can better WoodWard: It’s primarily for that. the larger manage access to documents and to historical companies will have this database, but I’ve also & Scarborough transactions that we have worked on for you. I been amazed with the calls that we get from was at a lunch a couple of weeks ago with an in- companies with large databases where we have Jon Neiditz is a partner in Nelson Mullins house counsel and she had lawyers in a number to check a financial ratio and a senior debt cov- Riley & Scarborough’s Atlanta office of different countries. And she had to quickly enant some place in a transaction from three and co-leader of the firm’s Information get out a non-disclosure agreement. She said years ago, can you guys pull that for us. Management Practice. His practice is focused I probably have 20 of these things, but I don’t sangston: Is this a proprietary database on assisting clients to meet the legal and technological challenges of electronically remember where was the last one, where it that you guys built yourself or is this an off-the- stored information, including managing came from or which law firm did it and I’m prob- shelf? risks and costs of e-discovery, developing ably going to end up calling one of the firms WoodWard: No, it’s an off-the-shelf. and implementing records management and having them produce another one. Well, we Veysey: We have an erM system, enterprise programs when much business-critical hear this time and time again and we come from record management. And we load all of our information is in electronic communications, a law firm, a business perspective, manage doc- contracts onto one single database. So attor- and preventing information leakage and uments for our transactions in house in a very neys throughout the world can do a search for privacy issues. Neiditz has represented logical manner. We’ve now taken that docu- any particular document, any particular term. I many clients in connection with breaches of ment management system and made that avail- mean, cisco’s got all these playbooks for every information security and across a very wide able to our clients and our in-house people in deal that they have done. It’s a tremendous range of other privacy matters. All such work particular. So we take a lot of those documents informational tool putting everything in this involves assistance in the transformation and we have a button on our Web site that says database. of the role of in-house counsel and of client info, you can sign in. It’s secured. they can partlett: May I turn to Jon now. control over electronic information, and go in and find a series of folders of documents neiditZ: What donna and I do relates to those Neiditz combines legal with organizational that we have worked on for them. We have a enterprise records management and database consulting services to meet those needs, place for, for example, company documents. So systems of larger companies, as well as their drawing on his background as a national that they don’t have to call a lawyer or parale- other risks and opportunities associated with consulting practice leader for a Big Four firm. gal in-house or at the outside counsel’s firm to the management of information. our work gives A graduate of Yale Law School, Neiditz has get a copy of sets of meeting minutes, find out us insights into what makes this panel so timely a broad background as a financial services where the stock certificates are, what was the and important. What’s so exciting about it is and health lawyer, general counsel and last one that was issued, options, warrants and that the evolution to which Michael trotter has business consultant. things like that. We make that available and we referred has been “schismogenic.” that is a term keep it up. from Gregory Bateson, an anthropologist who Another area that they like to go to a lot is if came up with it in the 1930s. the term has been their business people have to have documents adopted by linguists now to talk about human that they need to access with some degree of relationships, but he was talking about social regularity, we make that information directly and economic systems. What I mean by it is that accessible to them so they don’t necessarily have law firms haven’t really evolved in response to to pick up the phone and call counsel. then for client needs. As Michael’s books and articles some companies, they want to have shareholder point out, the internal evolution of law firms has information. We keep track and help them keep been geared more to profit maximization and up with their annual reports and so forth on the other opportunities for the law firms. As with site. they can give shareholders who have an the other schismogenic crisis we see happening interest also a secured access to the site. in our economy, that type of evolution creates the third group is the employees. A lot of com- an opportunity to hit the reset button, and in- panies have a difficult time—their hr depart- house counsel has the opportunity to push the ments—keeping up with some of the changes reset button on the legal profession.
    • 8 2009 sponsored section I brought a wonderful quote for those of you guilds make money primarily when the in-house who follow legal academics on how much the law departments are not able to do the work. reset button is being pushed in the broader of course, that changes some when you’ve got economy. this is from Judge richard posner, cisco Systems negotiating a pre-paid deal with who has just been reformed so that he now Morgan lewis for all of their commercial litiga- believes in regulation. Now, I have to read you tion. that creates an incentive for Morgan lewis this because it just gives you an idea of the to begin to change—to do risk management- opportunity we have in the legal profession. related work. Judge posner says: “If you’re worried that lions And so incentives are critical and communi- are eating too many zebras; you don’t say to the cation is critical, as Michael, robin and donna lions you’re eating too many zebras, you have said. But meanwhile, the great opportunity to build a fence around the lions. they’re not for law firms is that both of the two guilds are going to build it.” Now, this from the man who seeing tremendous erosion in their traditional wrote once that the way to solve problems of franchises because of offshoring, automation child abuse in our society was a free market in and non-legal resource. the traditional pieces baby sales. this is a man who really believed in for which lawyers are responsible are getting market economics. So you’re seeing an abso- commoditized, as Michael trotter has said. But robin sangston lute transformation of economic philosophy all there’s another side to commoditization to VP and Associate General Counsel over the country now, into we know not what which trotter has never spoken. In the consult- exactly. ing world, from which I come, what you’re trying Cox Communications At the same time, we have a chance to really to do at all times is to design products that do look at what the legal profession would be if it not exist yet in the marketplace, but meet criti- Robin Sangston is vice president and were designed now in response to the needs of cal needs. And so if we started from ground zero associate general counsel for Cox organizations. So that’s the basic question that and we ask, “What would the legal profession Communications. She joined Cox I’m going to ask. My client contacts are mostly be if it were designed to respond to the needs Communications in 1995 as its fourth in-house lawyers, and all of them face the same that organizations have?” then what you find attorney. She was promoted to senior counsel in 1998. In 2000, she was promoted issue I faced when I was in house: you need to yourself doing is something that is not a com- to vice president and assistant general control growing legal risks in micro-regulatory modity activity at all. Indeed, it’s the opposite counsel. Currently, she oversees all of the environments, complex regulatory environ- of commoditization. the creation of new prod- operations of the Legal Affairs Department. ments and other complex standards and in the ucts and services is first and foremost a strategic Prior to joining Cox Communications, information society where everything is record- activity. It’s an exciting activity that requires a Sangston was an associate with Dow, ed all the time. Moreover, you need to do this in lot of creative thought, and any new product Lohnes in the firm’s Washington office. more jurisdictions as organizations are global- involves strategic non-commodity components There, she specialized in litigation involving ized, with fewer resources. So what are we in the and commodity components if it’s going to be media companies. legal community doing to help you with that? efficient. this is an area that may sound some- Sangston received her J.D. from George Now, fundamentally, I would say that notwith- what abstract, so let me go back to this example Washington University’s National Law standing all the change that Michael trotter has of the need for new types of compliance and Center. In 2004, Sangston served as talked about, the major revenue streams of law risk management counsel. the national chair of Women in Cable firms are the same as they were 200 years ago. one of the things that Susskind talks about & Telecommunications, a nearly 10,000 think about the old guilds of barristers and in his book is that law firms have resources to member nonprofit organization whose solicitors. We now have corporate transactional develop the kind of compliance software that mission is to develop female leaders in lawyers and litigators who are the main revenue legal departments need, which are often not the the cable television industry. Sangston streams of law firms. same kinds of software that their organizations supports a number of other organizations donna and I recently gave a talk to second are supplying to them. Now cisco and cox may and initiatives dedicated to supporting graders on what it is to practice law. And imme- be exceptions to the rule here, because they are women and minorities, including recently diately after that, I gave a talk to a group of information-focused organizations, but most of being nominated to the board of the partners at our annual partners’ retreat on the the organizations that I know aren’t providing Minority Corporate Counsel Association future of law practice, and the second-graders their legal departments with budgets to create and previously serving on the board of generally had some more imaginative ideas. legal software. So there’s the opportunity for the Atlanta chapter of Cable Positive, Why is it that understanding of the law leads law firms to create products. a nonprofit organization dedicated to you to do one of those two things—litigation let me mention Susskind’s five types of law- raising AIDS awareness and funding AIDS or corporation transactions—if the primary yers of the future. there’s still the expert-trusted education, research and care. need of in-house counsel is for dealing with adviser. that person still exists, but there are complex systems of compliance standards and only a few of them. And then there’s the thing risks across global organizations. I was known called the enhanced practitioner. the enhanced as an in-house lawyer before the era of compli- practitioner is something of which I’m doing a ance officers as the lawyer who looked under lot more of, where you’re essentially an adjunct rocks. there are only so many rocks you can to the software services that you’re providing look under. So you need systems and other when they actually need to speak to someone. assistance to achieve compliance and risk man- then there’s the legal knowledge engineer. this agement. And if you look at the two guilds, cor- is in some ways the most challenging new type porate lawyers and litigators, neither of those of lawyer that Susskind talks about. the legal guilds are ideally suited to providing corporate knowledge engineer is designing the systems clients with the tools that they need to manage that produce what’s needed in order to meet risks and achieve compliance. And both of the the legal needs of the organization. there’s a
    • 2009 9 sponsored section gentleman there, rich Wyde, who practically is the software, but I am suggesting that if you a prototype of a legal knowledge engineer with change the incentives and you do flat-fee some of the things he’s designing. the legal risk arrangements, that law firms can be creative in manager is the fourth type, and all of us who designing solutions that will have more long- have been in-house counsel are very familiar term value for you and will cost less. And they with that fundamental role, but that would be will involve less of Jeff running to the file to find seen as a really important component of the the document and giving you the document. profession. And finally, the legal hybrid. that When we’re doing this kind of thing, we’re not involves the law working with other modes of asking anybody to pay more, but we are look- thought, other disciplines in order to be able to ing at how to deliver our services better. take, create value. Imagine, replacing the two guilds for example, global privacy. We’re doing data- that I mentioned before with these five types as bases for every kind of security or privacy thing if these five types were different components in the country or around the world, so to the of the profession. And I’m not suggesting that extent that we can put those databases into Susskind’s types are the right types, but when systems that are available to clients with good you start from square one, the opportunity is search and data mining capabilities, everyone great to really design something that’s very wins. useful. Veysey: Just on that point, one of cisco’s steven d. cooper sangston: May I react? While that sounds initiatives is what they call on-ramp exchange Partner really great and really wonderful, but until the and this is both open to internal and to out- Stites & Harbison economy turns around and my understanding side attorneys. Basically, it is like open source in is that’s not going to happen for three to five terms of exchange of information. So if we have Steve Cooper is a member of the corporate years, you’re not going to be able to sell me a particular subject matter, then it’s posted law group at Stites & Harbison. He has any software unless I can show that it saves me and if somebody has a comment with respect experience in mergers and acquisitions, money. to that, they can weigh in. And we make that negotiation and preparation of commercial neiditZ: right. accessible to the law firms, as well. And what’s agreements and distribution and supply sangston: So you have to show a direct the incentive there? yeah, you’re saying well, agreements; corporate finance and reduction in outside counsel spend or legal I’m not charging you for that, but all of a sud- international business transactions. Cooper fees spend, hence, I can get money from e-bill- den we’ve identified and said, oh, this person also has advised clients on wrongful ing solution because I’ve been able to save a has the subject matter expertise that’s going to discharge, discrimination and other aspects lot of money by implementing e-billing solu- fit right in with the particular issue. So where do of employee relations. Cooper has counseled tion and I’m going to be able to get better data we go in terms of retaining outside counsel? numerous companies engaged in the direct and save a lot more money in the next three to neiditZ: one of the keys here is when you’re sales of goods and services in the United five years by using the e-billing solution. But creating new kinds of partnerships, where States and overseas. if you’re selling me software to do compliance does the expertise lie? Now, when you’re deal- Before joining Stites & Harbison Cooper was right now, I’m going to use my in-house experts ing with cisco as opposed to any law firm, the a partner with Varner Stephens Humphries to do compliance and they’re going to put expertise on any information system lies with & White. He also has served as senior vice together a cross-functional team with business cisco. let’s assume that. And so what you want president and general counsel of Electrolux people, It people, a project manager. they’re to do is create interesting ways of integrating Corp. from 1973-1998. Cooper began his going to come up with a system and a solution the lawyers into organizational systems that legal career as an associate with Dewey that may not be a fancy software program, but you provide. For others, law firms can help pro- Ballantine in New York City. it will have a systemic capacity to it. And then vide the organizational systems that a strapped A graduate of Columbia University School we’re going to operationalize that, then we’re corporate law department cannot. But how do of Law, Cooper has served on the Columbia going to push it out, and then the in-house law- you do it? how do you do it when you’re a law College Alumni Council since 1997 and yer’s going to manage it. So I just think that it’s department and you’ve got certain processes is the former president of the Columbia a great idea, but I’m not sure if the economy is you go through with the It department for any University Club of Atlanta. He is a member ready for it. new It product and it’s a two-year process? of the National Council of the American neiditZ: that’s very well said. let me con- Well, maybe there are compliance solutions Jewish Committee and a member of the organization’s National Legal Committee. trast two of the techniques that I think Michael that are Internet-based that are available to Veysey underscored so I can show you that it’s you and that can actually work where you don’t not as impractical as it seems. I think on the one have to go through that kind of process. But hand if you take the story of Mark chandler and robin’s point is very well taken, that the object the big fixed-fee deal with Morgan lewis, I’m has to be to do everything cheaper. sure that there was a great deal of communi- trotter: I think we have to recognize that cation there, but fundamentally that was a the Brits, the Magic circle firms, have been changing in incentive. And the change in the ahead of the U.S. firms for the most part in incentive is what created the transformation of terms of knowledge management. they have role. Now, if you were to take your spend in a had full-time lawyers on their staff who do not particular area of compliance, look to a firm to work for individual clients but who manage the provide solutions, and if that firm had already firm’s knowledge resources, think about ways developed solution sets that included all of the of packaging those and making them avail- answers that you needed, you wouldn’t need able to clients that are different from the tra- to spend more for those solutions; you might ditional ways of doing things. And we’ve had well be able to spend less. I’m not suggesting some law firms in the United States who, one that law departments are going to spend on way or another, stumbled into this thing. one
    • 10 2009 sponsored section example would be Bryan cave. Bryan cave sev- you want. one potential answer to that question eral years ago had a big employment practice. is let’s work on an rFp, which spells out exactly And somebody came up with the idea and said, what you expect from outside firms. you have well, what if we instead of handling all these the opportunity to make those changes. cases, we came up with a seminar that would Veysey: you said the legal research, you train our clients’ personnel on how to avoid don’t get it, you get an answer. I think at that these cases. Now, that requires an investment point you ask for it. that’s yours. And if there’s a of capital and time that American law firms have memo that’s done by an associate and you want been not enthusiastic about doing. you leave to see that research and the result of that, you capital in the firm by making an investment in just ask. some product or service or software that would a participant: With respect, I don’t feel be available to clients and that’s taxable income like this is really much of a paradigm shift. I to the partners in most cases because it’s a capi- think that people are still too anchored to the tal expense and has to be amortized over time billable-hour model. Georgia-pacific has about and the firms have really been focused on trying 4,800 domain names, for example. We use a to pump out as much cash as possible and are company now called Melbourne It. And Mel- under-investing, I think, generally in their intel- bourne It hired lawyers who are now starting david F. partlett lectual capital. to offer services in a very, very nontraditional Dean sangston: I think every firm out there is way as opposed to outside law firms. And all the under so much competition right now, they’re stuff that they do is for It lawyers, and offer it Emory School of Law all chasing a smaller number of legal dollars and to privacy as well. It is really on the edge of the the savvy firms are the ones that realize that the law where the law has not really caught up with David F. Partlett assumed the deanship of relationships are the most important thing now what’s going on. So I can’t really look at law as Emory Law on July 1, 2006. He is the Asa and the law firm that offers me a two-hour cle a commodity the way some people can. I have Griggs Candler Professor of Law. Partlett for free on antitrust law or privacy or employ- to really look outside the model entirely. And previously served as vice president, dean ment and we get all our cle requirements at my one of the things, for example, in privacy is I’ve and professor of law at Washington and Lee firm for free, basically provided to us by law firms got in-house policies. I’ve got tons and tons of University School of Law for six years. He joined the faculty of the Vanderbilt University that want to come in and do a presentation on a need for database and documents. I got records Law School in 1987. He was a fellow in the subject matter area that they have expertise on. management problems and e-discovery prob- Institute for Public Policy Studies and was So I think you’re really missing the boat if you’re lems and so on and so forth, we can go on for- acting dean from 1996-1997. Partlett held a law firm and you’re not taking advantage of ever. It’s all information management. It’s all positions in the Australian government as a those opportunities right now. data going over different pipelines. What I really senior legal officer for the Commonwealth talk about the reset button; we have one law- need is somebody to come up with something Attorney General’s Department. From 1978 yer from a law firm in town here who comes to that can combine everything and find it all, and until 1987, Partlett was a member of the our offices one day a week now for free and she give transparency to all the businesses. So give faculty of the Australian National University, does contract review for us. We have two other me free interns, reduce legal fees, give me flat and he served as associate dean from 1982-85. major law firms in Atlanta who offer us associ- rates, none of this really helps. I really need to He is a member of the American Law Institute, ates for six months, one for free and one for a smash the stone and build something else from the American Society of Law and Medicine very modest amount of money that would be the ground up. I really think that this anchoring and the Selden Society. He currently teaches comparable to what I pay a special counsel or to the billable hours is not enough and sooner torts and also has taught courses on judicial counsel on call kind of hourly rate, so there is or later there’s going to be some really success- remedies and professional liability. He has desperation out there. the button has been ful firms that are going to start ground up and it authored books on torts, defamation and pushed. We have a lot of leverage in house. I will either catch on or it won’t. It may not catch free speech, child mental health and medical mean, it’s not that we want to take advantage on and the economy may come back and we malpractice. of anything, we want to work with our law firms may be re-anchored to the billable hour model, A native of Australia, David Partlett earned his and help our law firms through these difficult we all have more money. I really think the fun- LL.B. degree from the University of Sydney times, but sometimes taking advantage of some damental paradigm shift if it’s going to work is School of Law, an LL.M. from the University of of these opportunities might help an associate not just bailing the boat out forever. Michigan Law School and an S.J.D. from the stay employed. neiditZ: Where does this mechanism for University of Virginia School of Law. partlett: We’ve got some questions from pulling things together that he’s talking about, the audience now. where is it created? And so one place that is a a participant: out of say a hundred law part of Susskind’s book, in fact, one idea for firms that we use, 90 percent of them use case where it’s created is within specialized law Met. Not one of them have ever said to us do firms focusing on the needs of multiple clients you want to have access to these documents. because it’s something of value to those clients. So my question is: Why don’t they? If I don’t ask, the question is, can we push the reset button they don’t tell. At the same time, they’re billing to the extent that we’re able to create things us or making copies and mailing them and Fed of great value to one or more organizations? ex-ing them where the access is right there. Among Susskind’s ideas is that lawyers from that’s one part of the question. the other part different firms will be expected to collaborate is the legal research that law firms do, we never more in getting things done for different com- see it. they don’t send it to us. We just get the panies. clearly, the billable hours are a major answer and that’s it. obstacle as Jonathan said and yet it remains neiditZ: this is a really critical question, how the rule in most cases. one of the things that do we push the reset button? you know what is an accidental benefit in our law firm is we
    • 2009 11 sponsored section don’t really have billable-hour requirements, at tatives of the great institutions. the fact is that least corporate lawyers don’t. We have revenue the open source world has tremendous poten- requirements. And so if we can figure out better tial for law. you also see legal publishers com- ways to generate revenue, providing value to ing in and doing tremendous things in terms of clients, in theory, the billable hours don’t mat- production of knowledge. yes, law firms haven’t ter. I think more law firms need to move in that done much, there’s no question about that. direction. Write-off reports are tyrannical and But the fact of the matter is that there’s noth- they force people to think only in terms of hours ing stopping us individually or as organizations rather than in terms of getting the work done from doing a great deal more than we’re doing. and value added. And the question really is, who wants to take a participant: I just want to say one more advantage of this unique period? thing. I see the law worlds this antihybridization sangston: It may only be tinkering and it inertia, but if you look outside the law world, may only be evolutionary and not revolution- there’s plenty of things in hybridization. I never ary, but I still feel that my company is benefit- thought Wal-Mart would sell milk, but they do. ing from the current climate by being able to Accounting firms didn’t used to loan money, but get something that approximates value-based h&r Block loans money. Software companies billing where I can look at the body of legal didn’t used to offer free software, but turbotax work that I have and I can say oK, this is the bet- donna K. lewis gives you free software to do your taxes over the the-company stuff, this is the survival of this Partner Internet. there’s all these different hybridization product, this is all our revenue generation, this Nelson Mullins Riley models outside of the legal world, so there’s no is mission critical. Maybe I’ll still be paying for reason to think people are considering it and on that at an hourly rate, but at least I have a bet- & Scarborough a smaller scale start doing it. ter ability to negotiate that rate to dictate how neiditZ: In fact, you all may remember a few I want that matter staffed, to talk about some Donna K. Lewis is a partner in the Atlanta years ago there was the dispute within the bar of these other things. And then down here you office of Nelson Mullins Riley & Scarborough. on multi-disciplinary practice. At that time, I was have this commodity work that five years ago, I Lewis focuses her practice on strategic a lawyer practicing within a giant consulting was paying some lawyer $500 an hour to review commercial transactions, the majority of firm, and I loved being able to deal with people contracts, now I can use my e-billing solution which involve technology, content, data or other intellectual property. She has from every intellectual discipline as a team, just and all the data I have and I can here’s a thou- experience structuring and negotiating as in-house lawyers are able to deal with people sand hours of billable time, and I think this work licensing, outsourcing, procurement and from every possible intellectual discipline, but is worth $200 an hour. law firm X, if you want services transactions, representing both the bar took a position against multi-disciplinary it and you can figure out how to make money buyers and sellers of goods and services. practice, which is why we’re not all working for off of it, you can have it. otherwise, I’m going to Much of Lewis’ practice focuses on products non-law firms right now. And so we have to work either hire another in-house lawyer or I’m going and services enabled by new technologies, within that structure. It may be that ultimately to outsource it to a contract place and then all such as the Internet, wireless, IPTV and digital the bar reconsiders that position because law that work in the middle, which is the really good cable. Her expertise also includes data privacy firms have to provide more value. juicy stuff, that’s the work I’m going to save and security, digital rights management partlett: this relates to the future. let me for my in-house lawyers because that’s what and electronic commerce. Clients include ask Michael to comment on that. makes them want to come to work every day companies in the technology, services, trotter: I think it’s very unlikely that law and that stuff is important to the company and media, financial services, telecommunications firms or legal departments will be the source of it’s cutting edge and it’s working with business and health care industries. Lewis also has the changes. professor clayton christiansen at people. And I’m going to be able to make the experience in general corporate matters, the harvard Business School has written about case, again, because information is king and it’s including entity structure and formation, destructive recreation of enterprises and the cheaper for me to hire another in-house lawyer venture capital, mergers and acquisitions, and basic case studies indicate that the leaders in to do that than to outsource it to a law firm. So protective commercial agreements. particular industries are very rarely able to make that’s not revolutionary, but it’s a different place Before joining the firm, Lewis was senior the changes necessary to reform themselves than I was five years ago and I can say now I was vice president and chief legal officer for because it’s so profitable and they’re so com- asking heather this question, 40 to 50 percent Turner Entertainment Group, the subsidiary fortable with what they’re doing and what nor- of outside counsel billings now are moving into of Turner Broadcasting System. Earlier, Lewis mally happens is some niche player, someone an alternative arrangement. she was senior vice president of business appealing to a small piece of the market that’s I wanted the dean to talk about the curricu- development for CNN. Lewis also has been an been ignored develops a new concept or a new lum change because I was excited to hear about associate at King & Spalding. She is a graduate idea and then comes in and sweeps aside the that. And I think there’s a lot you can do with law of the Emory University Law School. established players. Now, certainly what we students who are twiddling their thumbs in the have here is we are still thinking about tinkering third year, if there’s still going to be a third year; with the model that we’ve used for the last 60 I heard we’re going to move to a two-year law or a hundred or 200 years as opposed to com- degree program. But if there’s an apprenticeship pletely changing that model. And it’s almost component or a drafting component to the cur- impossible for us to think of it as a possibility riculum where they’re learning to draft in plain because we are so steeped in the old model. english, practical business language and consis- neiditZ: Well, I’m not sure. I for one don’t tency, there’s definitely room for improvement feel steeped in it. I’ve been in big law firms only there. three or four years. We’re steeped to different partlett: Absolutely. And I don’t think this degrees. Some of us feel like little open source is just a third-year thing. the way we’re conceiv- guys working in garages, not like great represen- ing of this at emory is that it really starts in the
    • 12 2009 sponsored section first year. We’ve already now for two years had munication. It’s less on the golf course, more on day it might result in happier lawyers. a transactional law program. the students are the project. partlett: robin, that’s really an excellent put to the task of looking at deals and trying to a participant: What rich said before strikes point because I think that when you look at the figure out how one goes about the lawyering me as the travel agency model where they used students who come into the top law schools in of deals. how do you do it? capstone courses a lot of service and you paid a premium but the country, they’re some of the most creative, in the third year which would be rather special- now all these other businesses have innovated energetic, talented people in our society. And ized say in M&A and securities. that would real- and they’re so much cheaper. And what a lot of we should be giving them greater creative ly steep our students much more in the trans- people are doing now is they don’t like the fact opportunities in their careers. actional side of law. As you know, law schools that they get no customer service with this trav- WoodWard: From an in-house perspective, have mainly been on the litigation side. So this, elocity and any of the other services. So they’re where would you like to see the next three to I think, is a refreshing change. going out to sites and pricing them and they’re five years go in terms of building the capacities leWis: Well, one thing that you mentioned coming up with what might amount to com- in house? using the term value-based billing, and I think modity-based pricing and going back to the Veysey: From our perspective, where we it may go unsaid, but we’re all ethically charged travel agency and say can you meet this price. I spend the most money is with respect to litiga- with billing based on value. that’s how we’re want the service at a cheaper price. I think that’s tion. And in our particular case being a tech- supposed to bill. So I think that’s an impor- what people are doing with law firms. clients nology company, it’s Ip litigation. And where I tant thing to remember, that that’s the ethical come to you and say can you do it for $250, but would see in three to five years is do you want charge of the bar. I want the same services. I think you are right, to develop an in-house expertise so that if you Secondly, in terms of just evolution, revolu- they want lower prices but they don’t want non- are sued, you can bring in your own team to tion, whatever it is, we’ve got a lot of companies service. try that particular case. And go out and hire to look at right now that are not doing so well, a participant: I started teaching law in top notch litigators that have the engineering that have not evolved and have failed to change 1965. And when people say to me why do you backgrounds and understand the technology their models and so I think that people will resist do this, I usually say well, I won’t rest and I won’t and let them be your hired guns. I think prob- and I think that some won’t change their mod- retire until every American has their own indi- ably 80 percent of our budget of professional els, but they may not be here in 10 years either. vidual lawyer, and apparently I’ve been moder- fees is litigation. We’ve got the other disciplines And in terms of how quickly you accelerate that ately successful. I think the paradigm is shifting covered with these flat-fee arrangements. change it depends on where you are in the mar- and I think I’m hearing that I want to produce sangston: that’s an interesting idea. that’s ketplace. If you look at some companies, they’ve less lawyers in the future, and law schools have a bold step. It’s awfully hard to get money for not had to move quickly to new technologies. to figure out not just what they’re going to one lawyer, much less five, but I wish y’all the they’ve let other companies play in that space. teach, but how they’re going to deal with the luck and then I’ll copy your model. But litigation Startups, I think of Media World, for example. fact that the demand for product is going to is the toughest nut to crack and I think we are Big media didn’t have to adopt all these new drop, not increase. I think the bar associations going to move more and more in the direction technologies and jump right in until they were are going to have to just let it go and quit trying of getting better budgets for litigation. Again, comfortable figuring out digital rights manage- to use our guild mentality to keep the law firm it’s all about the data and the information. you ment and issues like that. in a traditional context. the paradigm is shift- just have to make that sell on a business person. partlett: Any other points from the panel? ing and I think the corporate world is going to I think you will see some growth when the econ- a participant: What I’m saying is that peo- expect firms that have legal talent in them to omy picks up in in-house law departments and ple are losing sight of relationships and intan- have other talent. And that new law firm model, I think you’ll see more value-based negotiation gibles that come with relationships with good by the way, is not going to be with the kind of with your law firm partners and you’ll see fewer lawyers. So I kind of feel there’s a devolution extraordinary income that some senior partners outside law firms but they’ll have more work. of our business, if you will, not professionalism enjoy. It’s going to be much more like corpora- cooper: I’ve seen a trend where larger com- as much as the relationships. And I think a lot tions with a salary schedule. panies are doing more litigation in-house, but of work is going to get done worse, if you will, sangston: I think all of this will ultimately not the big piece, not the bet-the-farm stuff. because you’re not going to have that trusted lead to more happy lawyers. one thing that we a participant: Well, that was the point I was relationship and those intangibles that lead to haven’t talked about is the fact that, yeah, we’ve going to make. When I was at coke, the gen- success like end-technology projects. got all these lawyers coming out of law schools. eral counsel wanted to bring more litigation in sangston: I disagree. I think that the firms We have all these giant firms with all this lever- house and we staffed up to do it and the prob- that are working with me and my folks to devel- age and we’ve had all these associates, fourth- lem is the challenge of staffing for valleys and op something that we believe is a value-based and fifth-years churning away doing document not for peaks. billing are going to develop a relationship, and production and doing redlining on big deals for Veysey: Maybe it’s a hybrid. Instead of in- we’re going to trust them more. I think where the last five years and making a lot of money, house counsel just managing outside counsel, the lack of trust has come in is when you feel as but were they happy? No. they left law firms in they may play a much more integral role in the an in-house lawyer that you’re not really getting droves. If they can get in-house, they’d come litigation of the case. take some of the depo- your money’s worth, or why am I being over lev- in-house, but Michael and I couldn’t hire all of sitions, particularly of the technical people. eraged on this matter? Why is a partner doing them. So many of those people ended up leav- there’s no reason why they can’t take the depo- this associate-level work? Why is this extra bill- ing the profession entirely. I think what we’re sitions. ing on here? So I think it will engender most talking about here is if this transformational shift sangston: I do think in the litigation area, trust and improve the relationship. happens, you get more people like donna and with respect to e-discovery, you are going to cooper: looking at it as the point of view of Jon who really like their job. you don’t have the see more and more companies taking on more the law firm, I agree 100 percent with robin. the sweat shop, big firms with associates churning and more of that in house and then outsourcing more demanding the client, the more innova- away who are never going to make partner. So the attorney review piece to contract lawyers tive the client in terms of requesting new things attorneys coming out of law school can kind of because discovery is the biggest cost in litiga- from us I think helps the relationship and doesn’t decide, how much money do I really need? What tion and it’s been this big black box for years. in any way hinder it. kind of a lifestyle do I really want, and what kind And I think we’re finally getting the tools and the neiditZ: I think it’s a different kind of com- of work do I want to do? I think at the end of the knowledge on how to do that better in house.