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June 15, 2005

A multi-million dollar fee

In the past, Tyco used 167 different law firms for product liability cases.  About nine months ago, they switched to oneShook, Hardy & Bacon.

The good news for Shook, Hardy & Bacon is a multi-million dollar fee for the 18 month contract.  The (potentially) bad news is that it's a flat rate, with holdbacks and "a large bonus" contingent on meeting extraordinarily detailed objectives.

At this year's LSSO conference, Jim Michalowicz, Tyco's Litigation Program Manager described the process they used to pick a winner from 26 responses to their RFP.  The criteria seemed pretty mathematical to me, and drew heavily on Jim's background as a Six Sigma Black Belt.  Interestingly, the winner was one of the few firms that had not done business with Tyco before.

The benefits to Tyco are immediate and apparent.  They estimate the savings at about 30%.  They've gone from about 250 sometimes unpredictable bills per month to one perfectly predictable bill.  They also have seen evidence of other benefits, especially in reduced case cycle time.  "Cases with no merit are getting dismissed much more quickly."

The bottom line for Shook, Hardy & Bacon?  They are only half way through the deal, so it's too soon to tell.  One Tyco goal was to structure an agreement that benefits both firms, as the basis for a solid business relationship.   I have no way of knowing whether this will be acheived, but I do know that Tyco will do well.

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