Trials and Tabulations

Want to advocate for lower legal fees? A number of new options deserve a hearing.

He also urges his outside counsel to use as much of the same documentation as possible for repetitive transactions. For example, amid the financial-market consolidation, A.L.P. has switched banks twice in the past 18 months, says Grady. The company was able to rely on some of the same documents in the process.

Company executives are experimenting with other approaches as well, in many cases borrowing cost-control techniques from other parts of the business. The ACC launched an initiative last September encouraging members to pursue alternative arrangements with outside lawyers, such as negotiating fixed fees for certain projects, consolidating work with fewer law firms in order to secure volume discounts, putting new projects out for competitive bids, and making some portion of the final payment contingent upon performance. Some in-house attorneys are also requesting discounts for early payment, a common practice in such areas as materials procurement but a rarity in professional services.

And then there is offshoring. Chicago-based legal-services firm Mindcrest employs more than 470 lawyers in India, where it can pay junior associates $25 to $50 an hour, more than $100 per hour less than an associate would make at a large law firm in the United States. The firm provides a range of legal services to both law firms and corporate legal departments, including document preparation and review. Competitors include Pangea3 and Quislex, both of which are based in New York but employ hundreds of lawyers in India. Still, despite the growing number of overseas options for routine legal work, just 2 percent of companies report that they use such a service, according to Fulbright & Jaworski, although that number jumps to 8 percent for large companies.

Mounting a Defense

Law firms have not been immune to the economic crisis and have made adjustments accordingly. Some large firms have laid off lawyers as much of the transaction-based work on mergers and acquisitions and initial public offerings has dried up. Many firms are trying to reemphasize their value to clients and to differentiate themselves from competitors.

Steve Blonder, a partner at Much Shelist, a midsize Chicago-based firm that counts A.L.P. Lighting among its clients, urges finance executives to consider the kind of services they need before rushing out to retain a top-tier firm at corresponding top-tier prices. “Many executives have leaned toward always hiring a big firm, because you will never be second-guessed for getting the biggest-name firm. But I don’t need to go to the Mayo Clinic for a checkup,” he says. “For most medical care, I can go to my family practitioner.”

Blonder says he recognizes that Much Shelist, with a staff of 85 lawyers, may not be the right firm for every assignment. “If you have a case that needs 15 bodies thrown at it, a smaller firm is not for you. But the key is differentiating: On what things do you really need that?” As finance chiefs look to trim their budgets, he says, “it should be a wake-up call to executives that the biggest law firms may not be a fit for them on every matter.”


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