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October 26, 2005

Will the Dupont Legal Model reduce your income?

When I taught a Rainmaker Workshop last week, a participant from Wilmer, Cutler, Pickering, Hale & Dorr brought up the DuPont legal model. The resulting discussion was so fascinating, that I decided to discuss the model in this week’s blog.

DuPont, of course, is one of the 100 largest companies in the world. For many years, the people who brought you Dacron, Teflon, Tyvek, Lycra, and Kevlar were best known in advertising circles for their slogan: “Better Things for Better Living … Through Chemistry.” But among lawyers, they will always be remembered for creating the DuPont Legal Model, a new way for corporations to employ law firms.

Dupont_legal_model
In 1992, DuPont established a “convergence process” to increase efficiency, reduce the number of law firms they used, and turn the survivors into strategic partners. According to the DuPont Legal Model web page, the key concept is “Early Case Assessment, which shifts the focus from processing a lawsuit to resolving the business problem.” In its first four years using this model, DuPont reduced its number of law firms from 350 to 42.

It’s hard to argue with the results from DuPont’s point of view: reduced costs, increased productivity, and improved quality. But you’d have to think that when more than 300 law firms lost DuPont’s business, they were less enthusiastic.

Now other large firms are trying the same thing, and the movement is picking up steam. For example, Tyco recently applied the model to reduce the number of firms they used in product liability cases from 167 down to a single firm. For details, see my June 15 blog posting “A multi-million dollar fee.” In another recent posting in this blog, Edward Schechter, Chief Marketing Officer at Duane Morris, summed up the implications very clearly and very simply “The DuPont model is changing the profession.”

The DuPont Legal Model web page has everything a corporation needs to get started on this process, including a 5 page downloadable RFP template. Here’s what that RFP template says about payment:

“1. DuPont is interested in results, not effort. Our long-range goal is to move away from hourly billing where feasible. We believe hourly billing is a disincentive to efficient service, and we welcome opportunities to structure fee agreements that provide for incentives and that reward results rather than time devoted to a matter. We solicit your input on alternative billing arrangements that allow you to deploy your resources in the most cost-efficient manner.

2. For the near term, in consideration for our placing our business with you, we solicit your proposals regarding reduced hourly rates, volume discounts, or other alternative fee arrangements.”

What do you think: will this reduce lawyers’ income?

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