Boards' Lack of Tech Savvy Poses Challenges for CLOs

January 24, 2023

If ever there was a case where board members failed to grasp the implications of inadequate technology investment—and the legal department lost an opportunity to school them—it might be Southwest Airlines’ recent flight meltdown. The debacle brought to light that none of the board members, who range in age from 59 to 78, had much in the way of relevant technology expertise that might have helped them better weigh risks and ask the right questions that might have averted the costly disaster.

Jason Winmill, managing partner at the consulting firm Argopoint, added that boards “need help in understanding what information they should be seeking. An effective general counsel can help a board be not only powerful but wise.”

“They may have a complicated relationship with the board,” Winmill said. “The general counsel may wind up in a position where “the CEO is saying, ‘You do not breathe a word to the board without checking with me first,’” Winmill added.

Full article: here

'Surprised, Angry, Dismayed': Legal Departments Vow to Fight Law Firms' Rate-Hike Plans

November 28, 2022

The in-house legal community is expressing outrage that law firms will be pressing for aggressive rate hikes in 2023, even though they know that legal departments are under extraordinary pressure as the economic outlook sours.

Argopoint Weighs In

Jason Winmill, managing partner of the legal department consulting firm Argopoint, said leading law firms are unleashing 2023 rate plans that are all over the map, ranging from no increase to hikes of 45%.

“This feels more like law firms throwing spaghetti up against a wall and seeing what sticks. This is a corporate legal roller derby, and I’m predicting there’s going to be a lot of crashes, wipeouts and disabled vehicles on the other side of this,” he said.

Winmill added: “How will in-house counsel respond? I have an idea: It’s not going to be good. In-house counsel is feeling surprised, angry, dismayed and perplexed as to how they’re going to make this work. The million-dollar question is: Can in-house counsel bring law firms to their senses, but not their knees. Outside counsel’s opening salvo isn’t going to make this easy.”

Many Legal Departments Lack 'Gumption' When Negotiating Outside Counsel Rates

October 07, 2022 at 06:41 AM

A new report from Wolters Kluwer found that many legal departments do a pitiful job negotiating outside counsel rates—with companies in the financial and banking industries being the big exception.

Argopoint Weighs In

Jason Winmill, managing partner of the legal department consulting firm Argopoint, said the findings don’t surprise him.

“While many in-house counsel are skilled negotiators by training, negotiation takes on a different tenor when you’re sitting across from an external partner whose collaboration you rely on for critical support,” Winmill said.

Of course, financial companies may have more incentives to negotiate tightly. Despite seeing low rate increases, financial companies still paid more for legal work than other companies, both in absolute terms ($59.1 million in 2021 on average, compared with $41.8 million that same year for all companies), and as a percentage of revenue.

Financials, which often operate in highly regulated industries, spent an average of 0.9% over the past seven years, compared with 0.7% in the broader universe of corporations.

Even with rate management, increasing use of alternative legal service providers, and sending roughly half their work to firms beyond the Am Law 200, financial businesses will spend more simply because of the heavy regulation, Winmill and Cemenska agreed.

Winmill said some financial companies take extreme steps to try to hold down outside counsel costs, such as conducting data analysis of line items in their law firm invoices, hoping to find cost-reduction opportunities.

ALSPs also present an interesting data point. Although financial companies still use ALSPs at lower rates than other industries, they’ve been stepping up their usage since 2019. That year, they paid just 0.5% of their outside spend on ALSPs.

That rose to 1.4% in 2021—nearly a tripling. In that same span, for other industries the spend merely doubled, from 0.9% to 1.8%.

Of course, those stats don’t mean every legal department should hire pricing experts, Winmill said. He said dedicated pricing expert roles make sense for the most mature legal departments.

However, legal leaders at all industries should at least be open to the idea, he added.

“It’s what the future may look like for departments in other industries as well,” Winmill said. “With increased spend comes increased investment in managing it.”

Outside Counsel P3 Program: This Might Hurt a Bit

By E. Gardner 

Dec. 2005

It was a cold day for a beauty contest, a small army of product liability lawyers made their way to New York. Pfizer wanted the 103 firms to compete.  As part of "P3," Pfizer-speak for Pfizer Partnering Program, the company demanded information.  Finalists traveled to New York, where small panels composed of company lawyers and outside consultants grilled them. Then came a fee review.  Pfizer contacted the 24 firms that made the final list.  

Pfizer isn't the first company to initiate an elaborate "partnering" process; Dupont, Motorola, and Sears all have instituted some form of "convergence."

Waxman stressed the outcome: "Better relationships, better value—there's a lot expected at this point.”

Argopoint Weighs In

Argopoint routinely adapts and builds on successful best-practices to help clients reduce legal costs and improve the quality of legal services. The Pfizer litigation partnership is just one of numerous examples in the legal space in which innovative thinking has delivered high-impact results. A client-firm partnership program model is by no means the appropriate answer for all clients. However, our experience has shown that clients most open to new ideas have enjoyed the most significant reduction in cost and improvement quality of legal services.

Outside Counsel Rationalization (OCR) is an approach adopted by many leading corporate legal groups to improve quality and reduce costs. OCR is designed to select and utilize optimal outside counsel for diverse legal needs.

Employing a structured process, outside counsel is objectively evaluated and tested against viable “market alternatives”, and favorable economic terms are obtained. Typically, management processes are established to ensure the program’s elements are implemented and both quality improvements and savings are realized.

Our clients depend on us to provide highly innovative, effective and industry-leading results. We combine evidence-based analytics with in-depth industry experience to deliver solutions that can be executed to achieve measurable, timely impact.  Though we pride ourselves on our proven quantitative and analytical techniques, we recognize that numbers and statistics never tell the whole story in the legal context. We perform a robust top-to-bottom assessment of every client’s specific situation and environment to reach a solution supported by facts, data and industry insight.