Last week, we dropped by NY LegalTech to find out What’s on the Mind of the General Counsel.
Three GCs were on the panel: Seth Krauss of Take-Two Interactive Software, Inc.; Dawson Horn III of Tyco International; and Jonathan Broder of Conrail. Conrail is, of course, the railroad company. Take-Two is a software and video game company, of Grand Theft Auto fame. Tyco is a well-known manufacturing company, of shower curtain scandal fame.
They provided some insight into the in-house world and what they look for when they hire outside counsel. “”We’re instruction-rich and cash-poor,” said one.
They offered advice to partners and lawyers who want their business. “Know something about me,” said Horn. In other words, Google him. And: “Believe in the cause,” he added.
That’s rather vague. More specific instructions for getting hired by a general counsel, and some advice for fellow GCs, after the jump.
Horn, of Tyco, started the panel off, talking about how his department is viewed by the Tyco business side: “The law department is perceived as a cost center, and does not drive profit.”
So there’s big pressure to keep their spending down. A colleague recommended Horn encourage Tyco to think of his department as a “value center,” but he scoffed at that.
He said that Tyco has memos of understanding with many firms, and typically uses three different models of payment: fixed fee, contingency fee, and success fee. He advised that fellow GCs talk closely with the business side of their company when structuring arrangements, so the biz folks know what bills to expect.
Horn presented a “hypothetical” of a victory in a matter that winds up displeasing the biz side, as they weren’t aware of a contingency fee to be paid.
When asked about trends they’re seeing in the industry, Take Two’s Krauss said that plaintiffs are making more reasonable demands. “People don’t see corporations as blank checks anymore,” he said. “If you don’t make me spend a lot of money on e-discovery, I have a little bit more for settlement payout.”
Krauss’s budget for outside counsel is $30 million. When he first started at Take Two, the company was using 70 outside law firms. He shaved that down to 20. He likes having one firm per practice area (immigration, employment, etc.), but a roster of firms for litigation, expecting some to be conflicted out on certain cases.
These days, how a firm bills is important. If a firm can’t conform with the software that companies use for billing purposes — C2 for Take-Two — it’s a deal breaker, and they won’t hire the firm. “Technology matters,” said Krauss.
Horn outlined what matters to him in hiring a firm. It doesn’t just come down to who’s cheapest. Broder and Krauss nodded vigorously at this. Horn said he thinks about a firm’s history working for him, and their performance in these areas:
These factors “often outweigh being inexpensive in searching out outside counsel,” said Horn.
All the GCs said that it’s “happening less often that you just go to a big, well-known firm and pay big hourly rates.”