Nestlé has reduced legal spend to 0.12% of net proceeds of sale, and other steps

Hans Peter Frick has been group general counsel at Nestlé for 17 years. An article by him in Legal Strat. Rev., Spring 2009 at 18, offers four tasty morsels.

Trust the work of your external counsel. He writes that “we focused on reducing the amount of duplication in the work that we do; for example, in the checking of work that has been outsourced to external counsel.” I would hope that law departments trust and rely on the services of their external counsel and do not think of reviewing the work other than occassionally for specific reasons. Applying the research and analysis of outside counsel to your client’s problem is one thing; checking their footnotes, cases and legal analysis is quite another.

Formally assess legal risks. The department introduced “new legal risk assessment protocols, making as much more proactive in our approach.” The article offers nothing more. Perhaps his staff have developed red-flag indicators, tiers of matters or tasks by estimated legal risk, or risk guidelines.

Very low total legal costs. “[W]e succeeded in reducing our legal spend to 0.12% of Nestlé’s net proceeds of sale.” Most importantly, that figure is extremely low; law departments are usually quite happy to come in at or below 0.3 percent of revenue. Second, as a methodological observation, I always use the term “revenue”, as in “lawyers per billion of revenue,” but there are many kinds of revenue figures.

Loyalty to firms. Nestlés has stuck with its core panel of law firms. Frick writes that “we are still using the law firms that we selected seven years ago” (See my post of Aug. 4, 2008: loyalty to law firms with 6 references.).