It what was undoubtedly one of the most anticipated discussions of Discovery Symposium 2.0, Sue Dyer (HCA), Jan Mendel (AT&T Mobility) and Carlos Provencio (Morgan Keegan) served as panelists and led a lively discussion that detailed approaches to working with outside counsel in the discovery process. Anne Whitaker moderated.
- Set a line in the sand with outside counsel; Say, “This is how we’re doing it”
- Building a “virtual law firm” controls outside counsel spending
- Regional law firms and a collaborative model result in great value
- It is important to set parameters on the front end
- Law firms “will not change until we make them change”
Sue Dyer began the session by discussing the “virtual law firm” model, which includes the use of regional law firms and a HCA-dedicated team of Counsel On Call attorneys for discovery. Not only has this approach reduced costs, but it has made the discovery process more straightforward and efficient and eliminated the dependence on one law firm’s process versus another. HCA brings that consistency to each matter, wherever the matter takes place.
The panel and audience also discussed that as far as law firms are concerned, “not much has changed.” Some who came from the law firm background empathized with the law firm argument regarding the use of less expensive attorneys, specifically that “they sign the pleadings” and their work is attached to it. The counter to this, according to Carlos, is that it’s a matter of assigning value to types of work, and he sees the law firm in a more strategic role in litigation. He will pay law firms “for inspiration, not perspiration.” Audience members and panelists agreed saying that “law firms will not change until we make them change” and going as far to say that value pricing should be “part of their corporate responsibility.”
Panelists also discussed e-discovery and its addition to their workload, as well as to the budget difficulties they once experienced. While it was somewhat frustrating, panelists agreed that it has been more disappointing that law firms simply “do not get the team approach.” The turf battles and desire to handle everything on a case only impedes what in-house departments are trying to do. For Jan, this has given her the opportunity to be more creative with her budgeting and thought process, and she has seen dividends already and expects more in the coming months.
The cost of legal services was also discussed at length. Several attendees said they will not pay more than $500 an hour in attorney fees. The suggestion that law firms will continue charging high prices as long as “Corporate America” allows it created a lively discussion with the audience. One participant said she believes it is “offensive” to pay someone $900 to $1,000 an hour and will not approve partner hourly rate increases; she will, however, approve some associate increases (once she gets to know the associate’s work product). Since many big firms are not making changes to their hourly rate approach or insist on rate increases, many companies have utilized a virtual/regional firm network, which is much more in line with hourly rates under $300 per hour.
One audience member said she believes the root of the problem is costly law schools and student loan agencies. Because law school loans are due so soon after graduation, lawyers feel compelled to charge an unusually high hourly rate to pay back loans right away. Another audience member then said he believes the problem is law firms competing for higher profits, that it’s not the law school but the “economic model of the law firm.” He cited the cost of a paralegal at one firm of being more than $300 per hour, which indicated a complete lack of understanding regarding value. He also discussed two of his law firms’ stated goal to be on the “top profit per partner list,” which he said they achieved… but his company no longer works with those firms because of it. He said his company’s goal is to never pay more than $300 for an attorney (they are at the $500 cap currently).
The issue of how to tell a law firm “this is how we’re going to do it” was then discussed. While it can be a difficult conversation, all who spoke agreed that it’s important to set a hard line in the sand. Many stated that it’s become clear that whether or not law firms do realign their business model, there’s a better way to handle litigation and discovery anyway. One panelist noted that she doesn’t know if law firms are ever going to “get it,” but that they haven’t waited around for their firms to do so.
The importance of setting parameters on the front end of a working relationship was also discussed. Several participants stated their desire to get better in this area; clearly defining roles and who will handle what work are important issues to address that aren’t always black and white. Including law firms in the decision-making process regarding the distribution of work and budgeting was one approach highlighted; giving firms the opportunity to match prices for discovery work has been utilized by some, but no firms have “met that offer.” Within that context of collaboration, Carlos discussed Morgan Keegan’s approach in using similar-size regional law firms and how, much like Sue and HCA, Morgan Keegan is already seeing benefits. The firms work well with one another and his Counsel On Call team; when a matter arises that a firm needs assistance with, another firm in his network will step up “seamlessly.”