Posted Jan 01, 2012 08:10 am CST
Note to outside counsel: When speaking to in-house lawyers at Pfizer, remember that they’re forbidden to talk about one thing you are interested in—billable hours.
Sound drastic? That’s not the perception of chief counsel Ellen Rosenthal, who conducts 70 percent of the pharmaceutical giant’s legal work through nonhourly arrangements with 17 preferred law firms.
“We determine a fixed fee at the beginning of the calendar year to be paid in equal monthly installments through out the year,” says Rosenthal, chief counsel of Pfizer Legal Alliance, the partnership built between the company and a network of firms that ranges from global multipractice giants to national-based boutiques.
The arrangement creates a predict able income flow for firms—as well as a predictable budget for Pfizer—and promotes greater efficiency, cross-firm collaboration and stronger, more valuable client-firm relationships, Rosenthal says.
“If they make us happy, [they’ll] ultimately make more money,” says Rosenthal, who spoke at the 2011 Futures Conference at Chicago-Kent Law School last fall during a program on the future of pricing legal services.
“But it’s more than lowering costs,” Rosenthal says, “it’s listening to the needs of the business.”
Eliminating the services of outside lawyers as much as possible—to merely a quarter of his company’s legal budget—has helped another GC deal with legal bills.
Fed-up with “sky-high” fees at outside firms, Mark J. Ohringer, executive vice president, global general counsel and corporate secretary at Chicago-based Jones Lang LaSalle, said at the conference: “I’m law firms’ biggest competitor, and I don’t think they see it that way.”
Jones Lang LaSalle, a global real estate and investment management firm, has boosted its in-house capabilities by adding 60 lawyers, and Ohringer says he won’t hesitate to add more as the company’s needs increase. He notes the average cost to employ an experienced in-house lawyer is $125 an hour, a bargain compared to many firm rates.
Ohringer says he keeps 75 percent of his corporation’s legal work in-house or sends it to non-law firm vendors like Axiom.
He did praise small U.S. law firms for their inherent cost containment and encouraged them to go after work typically reserved for their BigLaw counterparts.
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