A cash incentive to your law firms to help reduce your costs, even if their revenue drops

A profile of Mark Chandler, the General Counsel of Cisco Systems, in the Nat. L.J., April 16, 2007, Vol. 29, at 8, describes a thought-provoking possibility. Chandler asked one of Cisco’s primary law firms, Fenwick & West, “to figure out what was the 10% of their work that was the least value-added.” One of the tasks the firm fingered was fairly routine work filling out forms associated with the company’s acquisitions. Expensive associates were slogging through that drudgery.

Cisco hired a paralegal to do the forms, thus saving itself $400,000 in Fenwick fees, but it let Fenwick keep $150,000 of the savings. True, the firm lost revenue overall, but it gained a $150,000 incentive premium (almost 40% of the savings to its client) for both its honest, flexibility, and analytic ability. The article does not say whether the refund to the firm was only for the first year or would continue.

Every law department might try the same approach: “Show us how to reduce your fees and we will give you part of the savings.”