Corporate Counsel - March 2010 (Sample Issue)

Buchman, Houston’s Beck Redden & Secrest recently took on an appeal in a breach of contracts ruling for a ;at fee, with the proviso that it would also receive an additional success bonus if it won a complete reversal. If the case was reversed and remanded to the lower court, the bonus amount would be lower.

With its main panel firm, Locke Lord, meanwhile, Dynegy pays a monthly retainer for a “bat phone” arrangement, under which the ;rm is available to answer an unlimited number of one-off questions on employment-related issues. The ;rm receives another ;at fee to handle all of Dynegy’s Securities and Exchange Commission and other securities-related work. Locke Lord does charge a straight hourly rate on other matters, although—as with other panel ;rms—those rates are discounted by about 10–15 percent in exchange for a high volume of the company’s work.

“It’s a de;nite win-win,” says Locke Lord partner Bill Swanstrom, who notes that the ;rm now handles a far wider range of Dynegy matters, including bene;ts and project development and construction work, as part of a much stronger relationship.

ON MANY LITIGATION MATTERS, THE TRADITIONAL hourly billing structure still makes the most sense. Yet on those too Dynegy has succeeded in driving its overall

LITIGATION

costs down by clearly specifying how it wants those cases handled. With every new matter, outside ;rms receive a letter of engagement that provides detailed instructions on what type of work partners should handle and what tasks associates and paralegals should do, along with concrete rules on allowable expenses.

That’s a major shift from a few years ago, when, as Dynegy legal administrator Young notes, the company would just hand off matters and leave outside ;rms to staff them as they saw ;t. “We basically just gave them a blank check,” says Young.

Now those ;rms get detailed guidelines up front, and the company’s e-billing system enables staff attorneys to cross-check bills from outside ;rms to ensure that the staf;ng and expense rules are being followed. They can also ;gure out where they can drive additional ef;cien-cies and negotiate lower fees. “Knowledge is power,” says Young. Dynegy’s approach may not seem all that revolutionary. But according to Huron consultant Joy Saphla, many legal departments actually don’t take the time to give their outside ;rms such clear instructions. “That clarity is what delivers savings,” says Saphla.

That’s de;nitely been true in Dynegy’s case. Indeed, the company’s new panel ;rm model, in combination with closer oversight and ;at and discounted fees, has led to big reductions on outside legal costs. Last year, for example,