Archive: January, 2008

Rise of the Tyco Model

At the start of 2007, Tyco International reduced the number of its external legal providers across Europe, the Middle East and Africa from 250 to one; Eversheds. 12 months on, Nina Goswami of reports that Eversheds has become the sole provider to six other companies including Samsung and Akzo Nobel.

The secret to Eversheds’ success? A system for general counsel that breaks down their company’s legal spend by country, jurisdiction or practice area. “As any general counsel will tell you, the way to keep the boss happy is to give them an accurate projection of the legal spend,” says Goswami.

Interestingly, the selection of DLA Piper to provide global legal services to Linde (replacing 150 law firms) was also in part based on DLA’s commitment to invest in technology to be integrated with Linde’s existing knowledge systems.

Practice What You Preach

As any Fortune 500 general counsel will tell you, briefing law firms is not cheap. And stories of billing rates exceeding $1,000-per-hour and associate starting salaries hitting $160,000 certainly reinforce that notion. Hence the continuing calls from in-house lawyers for their external providers to become more efficient.

But, it turns out that the internal costs of large law departments have been growing more rapidly than their external costs. According to Altman Weil’s 2007 Law Department Metrics Benchmarking Survey, internal costs for in-house law departments of large companies ($5 billion or more in revenues) increased 7% over the previous year, while outside counsel costs were up just 1.4%.