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InBox
03 2010
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LEVI’S FAVORITE PAIR
The jeans king is using only two law firms for all of its global legal work.
HOW LOW CAN YOU GO? THAT’S A QUESTION
that Levi Strauss & Co. has asked not
just about its jeans, but about its outside
counsel roster. Last spring the clothing giant cut the number of law firms
that it uses down to just two—one of
the most sweeping reductions yet by a
large company. General counsel Hilary
Krane says that in addition to yielding
improved work at lower cost from her
outside firms, the deals have also had
a side benefit: better performance from
her staff attorneys.
Last May, Levi Strauss picked Orrick,
Herrington & Sutcliffe to handle all of its
worldwide legal work except for global
intellectual property matters; a month
later, the company assigned its IP portfolio to Townsend and Townsend and
Crew. Orrick and Townsend (both are
headquartered in San Francisco, as is
their client) are being paid on a flat fee
basis. That means that Levi Strauss is
using alternative fee arrangements for
100 percent of its routine outside counsel spending—an extraordinary development for any large company.
PHIL FOSTER
Levi Strauss and its firms declined to
reveal the dollar value of the deals. Krane
says the compensation amounts were
“determined by a review of historical
spending trends and planned work for
2010.” Levi Strauss, which is privately
held by descendants of its namesake,
reported net revenue of $4.4 billion in
2008. If its outside counsel spending is in
line with the average for other large companies, it would have been paying its law
firms somewhere around $11 million.
Global finance and governance counsel
Jennifer Chaloemtiarana says that the
deals with Orrick and Townsend have
lowered Levi Strauss’s outside counsel
spending by about 20 percent.
According to Krane, the simplicity
of flat fee billing has freed her staff from
having to negotiate fees with firms and
keep track of administrative matters.
“My internal lawyers are the most
valuable asset I have, and I felt they
should be spending their time creating
strategic advantages for the business
instead of managing outside counsel,”
she says. Now her in-house lawyers are
able to provide more “real-time strate-
gic counseling, as opposed to after-the-
fact firefighting.”
Levi Strauss’s favored firms are
happy with the arrangements too. “We
are learning how to do something com-
plex and creative that takes us away
] [ By Sherry KaraBIn
from the traditional billable-hour formula,” says Orrick partner Karen Johnson-McKewan. And Townsend litigation chair Gregory Gilchrist says, “We’re
not spending all of our time worrying
whether billable hours line up with particular matters or business units, so we
can respond where the work is needed.”
(Gilchrist estimates that Townsend
is handling about a quarter of Levi
Strauss’s outside legal work.)
Other companies have reduced their
law firm lineup or negotiated alternative fee deals. But Levi Strauss has taken
both trends to the next level, says Pamela
Woldow, general counsel at Altman
