Archive
Whoa! Your Outside Counsel is Making What Kind of Profit?
Justin Marty
Rees Morrison, Law Department Management
For the 200 largest law firms in the United States, ALM Media found that their profit margin last year was about 38 percent. (I assume that one-third margin makes up the distributions to partners at year end, over and above their draws.) Law firms make much more than their clients as a percentage of revenue. “In the last reported quarter, the average operating profit, net of tax, for a typical US manufacturing company was 7.2 percent, and among technical and professional services, it was a paltry 6.8 percent.” (click to read the post)
Fixed-Fee Legal Services.
Pikturewerk
Chris Johnson, The AM Law Daily
Having only started trading this February, innovative U.K. fixed-price legal services business Riverview Law is already set to expand internationally by establishing a practice in the U.S.
Riverview, which is part-owned by DLA Piper and whose parent company, LawVest, has DLA joint CEO Sir Nigel Knowles as non-executive chairman, will formally open a small outpost in New York later this week.
Riverview chief operating office Adam Shutkever tells The Am Law Daily that the fledgling company “aims to change the way businesses use, measure and buy legal services” by offering fixed-price litigation packages with annual and multi-year contracts. (read the article)
Activity Budgets From Outside Counsel?
by ryantron
Rees Morrison, Law Department Management
On a panel recently, a speaker urged the attendees, all from law departments, to request from their outside counsel what he called an “activity budget.” Rather than a money projection of what the firm’s services were expected to cost for the budget period, the information he requests is what the firm proposes to do during the period – its activities. (read the post)
Law Department Snapshot: Sears.
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Roger Adler, CorporateCounsel
Sears’ legal department boasts a headcount of approximately 170 people, including 52 lawyers. In addition to the attorneys, the group comprises auditors, paralegals, compliance experts and support staff.
Periodically, he hires outside attorneys to handle regulatory, marketing or advertising matters. He has structured a variety of fee arrangements and eschews a one-size-fits-all approach to billing. He has employed fixed fees, contingent fees and a mix of arrangements in addition to conventional hourly billing.
GC reports to the CEO and President. (read the article)
$10,000 per week per lawyer is processed by MMS software.
External spend per lawyer varies by matter management system: $10,000 per week processed per lawyer
Rees Morrison, Law Department Management
Broadly speaking, the finding from MMS Insights suggests that $10,000 per week for each in-house lawyer is processed by MMS software. Litigation lawyers account for the largest share of that spending, in the range of 40-50 percent. (read the post)
How far in debt are your Outside Counsel?
ImagesofMoney
Debra Cassens Weiss, ABA Journal
Dewey & LeBoeuf filed for bankruptcy on Monday, marking a formal end to the law firm formed in a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae.
The Chapter 11 petition anticipates a managed wind-down of affairs, followed by liquidation, according to a press release. The petition says Dewey owes $225 million to secured lenders and $90 million to other creditors, according to the New York Times DealBook blog, the Wall Street Journal (sub. req.) and the Am Law Daily. The firm lists $255 million in accounts receivable and $13 million in cash. (read the article)
Law Department Snapshot: Honeywell.
Honywell GC Katherine Adams is a ‘Jill of All Trades’
Roger Adler, CorporateCounsel
General Counsel Katherine Adams leads a legal team comprising 650 professionals, with approximately 150 legal supervisors working in supporting roles. Adams reports to chairman and chief executive officer David Cote.
Given the scale of the business, the department needs help from a lot of outside lawyers. The firms that Adams hires most often include Robins, Kaplan, Miller & Ciresi (intellectual property protection); Kirkland & Ellis (large litigation); Arnold & Porter and McDermott Will & Emery (environmental and legacy liability issues); and O’Melveny & Myers (antitrust). Adams’ internal budget outpaces the external spend, but she is “not trying to in-source everything.”
Billing arrangements depend on the specific matter at hand, but Adams generally uses a mixture of alternative and conventional rates. She has paid contingent fees and fixed prices, with add-ons or reductions when warranted. A large block of litigation may call for an annual arrangement with a set fee, she said. (read the article)
A Fortune 500 Pharma Law Department’s Top Metrics.
by lumaxart
While attending the session, “Metrics and Dashboards-Examples of Useful Report Formats”, at LegalTech West Coast’s LDO Track, I grabbed a few nuggets for the law department operations folks. Like the top metrics Amgen’s law department measures:
1. Annual Spend
2. Spend by Practice Area
3. Top 10 Law Firms
4. Top Law Firms by Practice Areas
5. Top 10 Matters
6. Top Matters by Practice Area
Who Should You Know in Law Department Operations?
LegalTech West Coast and Law Department Operations.
Jason Emanis
Just got back from LegalTech West Coast where Law Department Operations had a measurable presence. With a 2-day track focused on in-house department operations, there was plenty of education and networking to be had.
So, what or who, has been the impetus behind ALM’s newfound love for corporate department operations given their historical focus on lawyering, and, oh yeah, eDiscovery? It started with John Barber way back before LegalTech New York 2012. John is the Law Operations Senior Manager for Amgen, Inc. John has a passion for his role in the marketplace and wants nothing more than to bring his peers together so that they might learn from each other. And, of course, he has not done it alone. He reached out to the “who’s who” in law operations. (read the post)
Your Department Accounting for All the Spend?
by 401k
Rees Morrison, Law Department Management
Comprehensive legal spending by companies should include settlement, judgments, fines and awards. Data rarely appear on those outlays, but one source found that those “legal resolution costs” amount to about one quarter of internal and external legal costs. That ratio puts those costs at 20% of the total (See my post of Jan. 20, 2009: “for every $1 million spent internally and externally, the law department that conforms to this benchmark ratio spends $250,000 on legal resolution costs.”). (read the post)
