DuPont Law Firm Model Cracks
In an article in the ABA Journal, DuPont is reported to be looking at regional law firms, not just Big Law, for its outside counsel arrangements. DuPont started the trend to consolidate its outside counsel needs into fewer, larger law firms. This made sense. The more you can consolidate your resource needs, the lower per unit fee you can negotiate because of your increased power. Also, you can reduce your costs of operation because you have fewer billing statements to review, enabling you to keep better track of the accounting and reduce inadvertent errors.
As I've written before, however, Big Law, with all of the negotiating power of DuPont, still charges more than smaller firms with lower overhead and a smaller profit appetite. They're hungrier for the business. I chided ACCA and its members for failing to see this.
They are about to get the message ... good news for the smaller law firms whose quality of legal work is equal and whose economic appetite are more reasonable.
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Ed, I believe that the ABA Journal headline you refer to regarding DuPont's so-called shift in use of outside counsel was inaccurate and unfortunately so. That misleading headline has caused considerable confusion in the blogosphere.
In fact, the original Bloomberg-reported story at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aPaoB9uRSvQk did NOT report that DuPont was dumping its current large-firm outside counsel for smaller firms. The original story's lead sentence merely said, "U.S. companies, adopting a model used by DuPont Co., are adding firms with 300 or fewer lawyers to their outside-counsel roster and saving as much as half compared with fees of Wall Street firms more than triple that size."
In other words, other companies are following DuPont's long-time lead of using both large and small law firms to have readily available the right mix of law firm capabilities.
DuPont's current 44 law firms functioning at outside counsel (listed at http://www.dupontlegalmodel.com/plf.asp) already include a majority of small firms. In the original Bloomberg article, DuPont's well known GC, Tom Sager, bragged himself about how many small law firms are included in DuPont's stable of outside counsel. This is no change from what their model has been for the last 15+ years. They have for many years availed themselves of the best mix (for DuPont) of large and small firm providers.
Last week when I saw this misleading ABA Journal headline and subsequent misinterpretation by other commenters, I called one law firm (a client) that's a DuPont outside law firm and asked if this headline, albeit inaccurate, suggested any other changes afoot at DuPont. "No, this is just DuPont's way of getting good news out about the model they've been using for some time," I was told.
I have not reached out to DuPont myself to ask "the horse's mouth" what their current scene is. It would be a great idea if you wanted to do that to tie this so-called story down.
Thank you, Ann. I will call DuPont.