Alternative Fee Arrangements Gain Traction

Recently, the National Law Journal (NLJ) reported that Burger King Holdings Inc., is just one company asking its outside legal counsel to consider "alternative and creative billing" methods in responding to the company's request for proposals -- further evidence that the billable hour is losing popularity among corporate clients who are under mounting pressures to cut outside legal fees. (Another NLJ article this morning also discussed the need for alternative billing models.)

Burger King has negotiated a variety of alternative fee arrangements with its outside counsel, according to the NLJ, including fee caps, blended rates and monthly retainers. Other companies, as well as the American Bar Association and the Association of Corporate Counsel, also are calling for the demise of the billable hour, saying it “breeds inefficiency and is driving up legal costs." A number of law firms are heeding the call to abort and are offering flat fees, success fees and contingency fees. One such firm offering its clients a "smorgasbord of fee options," as mentioned in the article, is Valorem Law Group. Interestingly, Valorem cites the use of Counsel On Call attorneys as one of the reasons that it is able to provide its clients with so many alternative and cost-efficient options.

We applaud Valorem's progressive and straightforward approach with its clients. We have a similar mindset – if our clients see value in working with us, we want to provide solutions that work for them -- whether those solutions include great attorneys, remote work, tested and repeatable processes or alternative billing arrangements.

Another note: For those of you in Tennessee and the surrounding area, I would like to invite you to an upcoming CLE sponsored by the Tennessee Bar Association this Friday, February 6, at 9:00 a.m. (CDT). As part of this CLE, a panel of in-house corporate counsel, including Michael Zylstra with Cracker Barrel, Sue Dyer with HCA, and Debra Enderle with Willis North America, will discuss what creative ways and alternative fee options they have utilized in an effort to reduce their legal budgets. Register here.

Q&A: Sue Dyer, Senior Litigation Counsel, HCA - "A Repeatable Process"

Sue Dyer has spent the last seven years in Hospital Corporation of America (HCA)’s 50-attorney legal department and, as Senior Litigation Counsel, has been on the front lines of HCA’s development of a national e-discovery approach and protocol, a ‘repeatable’ process from which the company is already seeing benefits.

The largest for-profit hospital operator in the U.S., HCA had $26 billion in revenue in 2007 and was #87 on the 2007 Fortune 500 list. Ms. Dyer was nice enough to speak with Lawdable about HCA’s litigation (and specifically e-discovery) initiatives:

Lawdable: Discuss how the management of the e-discovery process has changed in the last 2-3 years, and/or how HCA’s approach has evolved.

SD: We are light years ahead of where we were just two years ago. Even though we’ve been focused on e-discovery for several years, in the last two years we’ve spent a lot of time educating ourselves about our IT systems and the multitude of e-discovery products on the market. Our goals have included the development of accurate and cost-effective processes that are repeatable. We’ve identified partners that share our belief in collaboration and that can help us accomplish these goals and, as a result, we have been able to implement many initiatives in the last year. Our approach also evolves with the evolving law in this area and the development of available technology.

What we’ve seen is that, with a repeatable process, we are able to collect data from one e-discovery project that guides us on each subsequent project. The data collection also helps us to better predict the expense of subsequent and/or similar cases.

L: Talk about your e-discovery communication process (and what you establish) with outside counsel and other legal service providers. How do you manage the process?

SD: We are actively involved at the beginning of each project in order to get the team acquainted with each other, to identify the location of the effected data and to participate in the project planning. Due to our large geographic footprint, we work with a lot of

different outside counsel. Outside counsel is a variable on each project. We try and use Counsel On Call on each project for consistency and knowledge retention in the application of our protocols as well as for data collection across projects.

Once the project launches, Counsel On Call provides regular, sometimes daily, detailed progress reports that include each attorney’s review rate for that period of time, the amount of data reviewed, amount of data remaining to review, marked and unmarked files by reviewer, reviewer hours, and other data. We also request notebooks summarizing the details of each e-discovery project (the data, costs per gigabyte or document, productivity, etc.) and a year-end overview that helps us evaluate our processes and aids our decision-making on subsequent projects.

L: Has the current economic climate forced any changes in your department/legal department? Do you anticipate changes (or further changes) in the near future?

SD: For the past several years, we have been fostering relationships with talented outside counsel who partner with us in our effort to control legal fees and expenses. We do this through creative pricing and the ability to work effectively and efficiently with a lean legal team. The current economic climate just increases the importance of this type of relationship.

During this same time period, our approach to e-discovery has been more fully developed, with accuracy, collaboration and cost-effectiveness as key factors. This is a significant area of expense and, in order to control some of the cost, we’ve developed the approach in which Counsel On Call plays a significant role. Using Counsel On Call as much as we can enables us to obtain quality legal services at unbeatable prices.

As for the future … Regardless of the economic climate, we’ll continue to employ both of these cost-saving strategies, as well as others.

L: What websites (and/or blogs) do you like to visit?

SD: I catch the news on either the Fox News or Tennessean websites. For professional websites, though, there’s just so much information out there. You have to pick and choose what to spend your time reading. I don’t do a lot of Internet surfing. Once I identify a reliable, accurate resource, I bookmark it.

How the information is packaged is important – it needs to be easily accessible and simple to scan. I like the updates I get from Kroll, as one example, and I regularly read the Corporate E-discovery Forum blog.

L: Let’s say you’re about to take a sabbatical, and someone is going to step into your role for the next six months … What advice would you give that person?

SD: I would love a six-month sabbatical! Probably the best advice I could give is to not be afraid to ask questions. HCA is a large organization and it’s challenging to get your bearings at first. Our in-house team is very good about helping each other out, especially the newer attorneys.

I’d also recommend developing a “triage” system. Way more work comes in than you can possibly get through in a given day, and you have to have a method to prioritize. Otherwise you’ll never get anything accomplished.