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DuPont GC Notes Legal Commoditization

Commoditization is taking place within some aspects of the law, according to Tom Sager, the DuPont General Counsel who recently announced that he will be joining Ballard Spahr. Small to mid-sized law firms that are able to offer more affordable pricing arrangements can benefit from commoditization, notes Sager, as well as outsourcing firms that specialize in routine tasks frequently done by associates, like document review.

A Wall Street Journal article earlier this month noted some of Sager’s many innovative approaches to the law.

During nearly 40 years at DuPont, Sager developed a “convergence model” built on close working relationships between the chemical manufacturer and a smaller number of law firms. While not the same as “panel counsel” that is typically found in the insurance defense sector, the DuPont model largely replaced the billable hour approach with alternative fee arrangements featuring bonuses and other incentives for favorable results.

“Eat-what-you-kill needs to be revisited,” notes Sager. In many law firms a hefty origination fee goes to the “finder,” while the “minders and grinders” among attorney ranks who actually do the work are compensated a relatively lower levels.

Sager positioned the DuPont legal department as a revenue generator rather than simply a P&L expense item. In 2012 the firm recovered $2.7 billion from claims, litigation, and other legal initiatives, according to the Wall Street Journal. The use of temporary legal staffing was another way that the GC’s office cut legal costs. Early case assessment was also adopted to manage litigation from a more strategic perspective.

One lesson to be learned from this article appears to be the need for constant innovation on the part of law firms. This could be evidenced in the form of alternative fee arrangements, the advanced use of technology, and outsourced legal processes to cut costs while enhancing quality.

Most important is the need for law firms to create binding ties with clients that can stand up to today’s highly competitive legal market.

Contact the author if you are looking for fresh ideas on how your law firm can increase its visibility and business development capabilities.

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