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June 15, 2009 4:33 PM

Few Large Firms Answer FMC's Calls for Help

Posted by Amy Miller

FMC Technologies, Inc., the Houston-based oil and gas equipment company, used Legal OnRamp, the social networking site for lawyers, to spread the word last month that it wants to hire tech-savvy, innovative firms that are open to alternative billing arrangements.

General counsel Jeffrey Carr says he's pleased with the response. About 50 firms downloaded a questionnaire from the site and then submitted the forms to FMC. Of those, 32 will take part in the next phase of what Carr calls the FMC Technologies 1˚ Law Litigation Value Challenge.

But Carr says he is surprised so few of the country's largest firms submitted questionnaires. Of those chosen, only 17 appear on The Am Law 100, and five on The Am Law 200.

"While there could be several explanations, including apathy or lack of awareness," Carr says, "a cynic might conclude that the vast majority of firms chose not to respond because they are neither willing nor able to embrace a changing competitive landscape where customers want new legal service delivery models."

Another explanation may be that big law firms don't want to compete with so many small or midsize firms who will likely offer lower rates, says Peter Zeughauser, a Newport Beach, Calif.-based law firm consultant and contributor to The American Lawyer. Big firms may be struggling, but if they're good, they can still command the same rates they always have. "Big law firms just aren't interested in competing for work on that kind of pricing," he says. "It's just not economical for them."

Making FMC's cut wasn't easy. Those that didn't were excluded for a variety of reasons, such as requesting blanket conflict waivers, being located too far away from FMC's headquarters, or not using FMC's matter management system, Serengeti Tracker. Some firms were excluded because they don't do any electronic billing at all. "In this day and age, that's very surprising," assistant general counsel Mark Wolff says.

Those firms invited to take part in the second phase now have to prove that they're efficient and focused on the bottom line--and that won't be easy, Wolff and Carr say. They have until the end of this month to submit sample budgets for the types of legal work they want to do. About a fourth of the firms chosen have worked previously for FMC Technologies.

Many lawyers believe every dispute is different and therefore having 'standard' or 'normal' budgets is impossible," Carr says. "While every case is indeed factually different, the costs are amazingly similar within a band."

In fact, FMC is helping firms create those sample budgets. The company is giving firms its litigation data for the last five years, including the number of cases, fees and costs, and budgets.

Our commitment to the firms is that we are going to provide them with as much transparency as we can regarding the world we live in, so we can reduce our external legal spending," Wolff says.

That type of inside information is invaluable to law firms when they propose alternative fee arrangements, says Martin Beirne, founding partner of Beirne, Maynard, & Parsons in Houston, one of the challenge's 32 finalists. His firm, which specialized in litigation, has already done a fair amount of work on fixed-fee arrangements, and it's more involved than most people realize, he says.

But Beirne says he likes FMC Technologies's approach to soliciting proposals, and not just because the company is being transparent about its litigation history. Using Legal OnRamp is innovative, and it's practical.

"I think the firms that have been selected to respond will get a really good feel for the company, and the company will get a good feel for the firm," Beirne says. "It's all being done on a very practical, lawyer-to-lawyer level."

The following 32 law firms have made it to the next phase of FMC's challenge:

Abbott Simses (a 16-lawyer firm in New Orleans)

Akin Gump Strauss Hauer & Feld

Andrews Kurth

Beirne Maynard & Parsons (a 60-lawyer firm based in Houston and Dallas)

Brown McCarroll (a 120-lawyer firm based in Texas)

Drinker Biddle & Reath

Fulbright & Jaworski

Law Offices of Tom Fulkerson (a four-lawyer firm based in Houston)

Gardere Wynne Sewell

Greenberg Traurig

Gruber Hurst Johansen Hail (an 18-lawyer firm based in Dallas)

Howrey

Jackson Walker

Kirkland & Ellis

Lavin, O'Neil, Ricci, Cedrone & DiSipio (a midsize firm based in Philadelphia)

Littler Mendelson

Looper Reed & McGraw (a 90-lawyer firm based in Texas)

Legal Research Center in Minneapolis

McDermott Will & Emery

Morgan, Lewis & Bockius

Pepper Hamilton

Roach & Newton (a six-lawyer firm based in Texas)

Seyfarth Shaw

Strasburger & Price

Summit Law Group (a 32-lawyer firm based in Seattle)

Sutherland Asbill & Brennan

Thomspon & Knight

Valorem Law Group (a seven-lawyer firm based in Chicago)

Vinson & Elkins

Wildman Harrold

Wilson Esler Moskowitz Edelman & Dicker

Womble Carlyle

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Eventually, the larger firms are going to be forced to accept alternative billing programs if they want to survive. It really is only a matter of time.

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