Cisco Systems, Inc.
San Jose, California
For Him, the Fix Is In
Above the Law
In Silicon Valley, an early evangelist for fixed fees.
NOWADAYS IT wouldn’t
be terribly unusual
to hear the general
counsel of a Fortune
500 company call
billable hours a “
medieval guild system”
that leads to “
unhappy lawyers and
unhappy clients.” But
Cisco Systems, Inc.
general counsel Mark Chandler has articulated—and acted—on those views for more than a
decade, making him one of the industry’s earliest
proponents of fixed-fee billing systems. In Chandler’s estimation, fixed-fee systems align outside
and inside counsel’s interests, which are natural
opposites: Companies operate on a budget, while
law firms are economically motivated to do as
much work as possible.
Chandler implemented fixed-fee arrangements when he took over the helm of Cisco’s
law department in 2001. Today, 80 percent of his
company’s outside legal spending, spread among
dozens of firms, is done through various sorts of
fixed fee systems. (The remaining 20 percent is
made up mostly of matters too urgent to spend
time negotiating fees on.)
“Mark was a pioneer in championing fixed-fee arrangements,” says Fenwick & West chairman and corporate partner Gordon Davidson.
When his firm started handling corporate work
for the San Jose–based networking equipment
maker in 2003, Chandler asked Fenwick to project how much work it would do for Cisco in the
coming year. Fenwick then received an annual
flat fee based on that projection, which could
be adjusted if the work came in over or under
the estimate. “It has definitely made us more efficient,” Davidson says.
EVER SINCE DAVID LAT, a former New Jer-
sey assistant U.S. attorney, founded Above
the Law in 2006, firms have changed the
way they operate, forced to assume that ev-
ery internal memo will become public. Lat’s
blog publishes a mix of gossip, commentary,
and news for a readership of about 900,000
unique visitors a month. Associates at large
firms use the site to compare salaries; the
blog is also known for breaking news on
firm layoffs. Regardless of one’s opinion of
Above the Law’s sometimes-snarky tone,
one thing’s clear: At firms, what happens
behind closed doors may not necessarily
IMF (Australia) Ltd.
Cash in Advance
Bringing third-party litigation funding to Australia—and the world.
IN THE SHIFT of legal research from books
to computers, there was no larger force
than the first nationwide electronic legal in-
formation service, LexisNexis. And in bring-
ing that technology to the desks of lawyers
everywhere, there was no bigger champion
than Jerome Rubin. The former corporate
lawyer started working on what would be-
come LexisNexis as a consultant for the
database’s creator, Mead Coporation. In
the early 1970s, Rubin suggested that Mead
market it first to lawyers on Wall Street.
Today LexisNexis is a staple of law offices,
placing 1 billion legal news documents and
36 billion public records at their disposal.
MICHAEL SEXTON (CHANDLER); ERICK REGNARD (MCLERNON)
WHERE WOULD an idea
like third-party litigation funding come
from? It would have
to spring from seemingly unpromising
soil where lawyers
are barred from taking percentage contingency fees and
where “loser pays”
More than anyone else, IMF (Australia) Ltd’s
Hugh McLernon (pictured) and John Walker
pioneered the model for investing in lawsuits
that’s starting to take hold in the United States
and the United Kingdom. IMF hires experienced litigators to evaluate claims and identify
those most likely to produce large settlements
and awards. McLernon figures they take less
than five percent of the cases brought to them.
Unlike Australian lawyers, litigation funders
are allowed to negotiate with plaintiffs and contract for a percentage of a settlement, usually
around 35 percent. In exchange, they pay the
lawyers in full and assume the risks of losing, like
possibly having to pay their opponents’ costs.
McLernon started an outfit in Perth funding
insolvency trustee cases in the late 1980s, while
Walker launched one in Sydney. The two soon
decided to work together and founded IMF,
now the Australian market leader.
IMF doesn’t intend to be confined to Australia, though. It entered the world’s largest litigation market as Bentham Capital in 2011, opening
a New York office and, more recently, a Los Angeles one. McLernon says IMF is now in the process of opening in London too, where the U.K.
legal system was recently changed to allow lawyers to take contingency fees of up to 25 percent.
ROBERT BANKS SR.
AS GENERAL COUNSEL of Xerox Corporation in the late 1970s, Robert Banks Sr.
moved a big portion of the company’s legal
work in-house, cutting its outside legal costs
by nearly 50 percent and showing GCs elsewhere how to strengthen their hands vis-a-vis outside counsel. To wield their newfound
clout, in-house lawyers sought cohesion, so
Banks went on to help found the American
Corporate Counsel Association, the leading organization in the in-house world, in
1982, and was elected its first president. The
group, now called the Association of Corporate Counsel has a current global membership of more than 30,000.