Odd request of outside counsel to cut bills according to the completeness of matters

Corp. Counsel, Vol. 16, March 2009 at 17, recounts that Jeff Carr, the General Counsel of FMC Technologies “sent a letter to FMC’s law firms in which he asked them to cut their bills by 10 percent on matters less than half done, and by 5 percent on matters more than half done.”

If you are a firm, how precisely can you tell where you are in a matter? And, given the financial incentive, won’t lots of matters be “over half done?”

Perhaps once a matter has passed the half-way point, that is like a point of no return; the law department does not want to change firms so it lacks the leverage to demand a 10 percent slice (See my post of Sept. 12, 2008: transfers of matters to new counsel with 8 references.).
The two discount points will create quite a logistical mess in terms of tracking compliance.

Whatever the logic behind this move, it suggests a new way to think about discounts (See my post of Jan. 21, 2008: 10 more posts with variations on discounts; and Dec. 26, 2008: third metapost on discounts, with 12 references.).

Jeff Carr says:

March 6, 2009 at 3:23 am

Rees — you may have forgotten how our ACES model works — it’s based on matter budgets and uses a performance based pay model to reward (or penalized) efficiency and effectiveness. As to when does a matter pass the halfway point — it’s really pretty simple — for litgation, we have a target cycle time — if your 50% past that, bingo. For everything else, there is always some targetted time frame involved — often simply annual if it’s a general matter. Our concept of status is based on time, not on budget. I’m happy to send you the memo to firms and the ACES model if you’re interested. And by the way, we have absolutely no problem pulling a matter from a firm at any time — there is no point of no return in our world. All the best, Jeff