“Constructing Legal Strategy in the New Economy: Alternate Servicing and

Billing for New Value Propositions”A roundtable discussion with Stites & Harbison and Nelson Mullins

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2 2009

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About The Sponsorstites & Harbison is a pre-eminent law firm based in strategic Southeastern locations and sought by business and institutional clients nationwide for sophisticated transactions, difficult litigation and complex regulatory matters. Tracing its origins to 1832, Stites & Harbison is one of the oldest law practices in the nation and among the largest law firms in the region. nelson mullins riley & scarborougH offers the strength and resources of a national law firm with diverse attorneys and professional staff experienced in a broad range of issues. With a firm Southeastern base, Nelson Mullins has grown into a national firm with a strong reputation in meeting the complex litigation, corporate, securities, finance, employment, regulatory and other needs for clients ranging from private individuals to large businesses, including many publicly held companies.

The Panelists

Michael VeyseySenior VP and

General Counsel Scientific-Atlanta

Moderator: David F. Partlett

Dean Emory School of Law

Jeff D. WoodwardPartner

Stites & Harbison

Jon A.NeiditzPartner

Nelson Mullins Riley & Scarborough

Robin SangstonVP and Associate General Counsel

Cox Communications

Donna K. LewisPartner

Nelson Mullins Riley & Scarborough

Michael H. TrotterPartner

Taylor English Duma

Steven D. CooperStites & Harbison

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T h e D a i l y R e p o r t a n d t h e l a w f i r m s S t i t e s & H a r b i s o n a n d N e l s o n Mullins Riley & Scarborouth recently

c o n v e n e d a r o u n d t a b l e t o d i s c u s s h o w o u t s i d e c o u n s e l c a n w o r k w i t h i n - h o u s e c o u n s e l t o p r o v i d e o p t i m u m v a l u e i n t h e c u r r e n t e c o n o m y . T h e d i s c u s s i o n , m o d e r a t e d b y E m o r y L a w S c h o o l D e a n David F. Partlett, covered a range of topics t h a t t o u c h e d o n h o w t h e l a w f i r m a n d in-house business models are evolving in a changing economy. Panel ists included S t i t e s & H a r b i s o n a t t o r n e y s J e f f D . Woodward and Steven D. Cooper, Nelson Mullins attorneys Jon A. Neiditz and Donna K . L e w i s , T a y l o r E n g l l i s h D u m a a t t o r n e y Michael H. Trotter , Cox Communications v i c e p r e s i d e n t a n d a s s o c i a t e g e n e r a l c o u n s e l R o b i n S a n g s t o n a n d S c i e n t i f i c -Atlanta senior vice president and general c o u n s e l M i c h a e l V e y s e y . T h e i r r e m a r k s follow.

Jon a. neiditZ: In the legal profession now, one hears so much about the changes and the dire consequences of the changes that are affecting the profession, but it’s really a tre-mendous opportunity to hit the reset button. there’s no one with the finger on the reset but-ton as much as in-house counsel.

this is a session generally about achieving much more with much less by doing things dif-ferently.

It’s a real pleasure and honor to have dean david partlett of emory law School here to coordinate this panel.

dean daVid F. partlett: yesterday I was at the Supreme court with all the morning coats and all of the ritual involved, all very significant for the rule of law. less than 24 hours later, here I am talking about this dynamic interaction between the corporate sector law firms and, of course, you can’t leave out the law schools. And that is really my great concern these days.

let me say from the point of view of law schools, that I was on a panel just last week with two other law school deans, and we talked about changes in legal education. We are going to see tremendous changes in legal education as a result of what is happening in the world. We are seeing the forces now in terms of our students’ not finding employment the way they

have in the past, and the need for law schools to be much more responsive in their curriculum than they have been previously. It is amazing to consider that harvard law School adopted a curriculum back in the late 19th century that has persisted for over a hundred years. that was the model curriculum for the entire legal education world. recently we have begun to see changes. At emory, for example, we have just adopted a new curriculum. there will be much more emphasis on transactional law than there ever has been before. there will be a first-year course in business law.

let me just introduce very briefly our distin-guished speakers. Michael trotter is a partner in the Atlanta law firm of taylor english duma and has practiced corporate and securities and business finance law since 1962. he graduated from harvard law School in 1962. I am pleased to say that he has taught law at emory. he is in the securities regulation area. thus, he has contributed to “the harvard of the South” very nicely. he has written very broadly and is par-ticularly thoughtful in this futuristic aspect of writing. his 1997 book, “profit and the practice of law— What’s happened to the legal profes-sion,” was very well received. And he has con-tinued that writing more recently in 2007 with “A pig in a poke? the Uncertain Advantages of Very large and highly leveraged law Firms in America.” It is always heartening for an educa-tor to see a lawyer stay close to his alma mater, and Michael has stayed close to Brown where he has been a trustee. the next speaker will be Michael Veysey, who is now with cisco Systems, which before the takeover by cisco Scientific-Atlanta was of course, Scientific-Atlanta. he is senior vice president and general counsel and corporate secretary of cisco Systems. In that position and in earlier positions in the corpo-rate area, Michael had vast experience, par-ticularly in the practice of corporate law in the multinational context.

Steve cooper is from one of the sponsor firms, Stites & harbison. he will address the modern issue of paperless electronic document man-agement systems. Before joining Stites & har-bison, Steve was senior vice president and vice president of the electrolux corp. he too has served his alma mater well. We were just dis-cussing his involvement with columbia Univer-sity over the years.

robin Sangston is vice president and associ-ate general counsel of cox communications. She joined cox when it was rather small, the fourth attorney, I’m told. She has managed a host of matters there and remains very active in the community activities. robin will be address-ing the changing legal landscape.

donna lewis is a partner at Nelson Mullins. I want to note first and foremost that we are very proud of her because she is an emory gradu-ate, and she served on the emory law Journal as managing editor. donna has had a distin-guished career focusing on strategic commer-cial transactions, the majority of which involved technology, context, data and other intellectual property.

Jon Neiditz is a fellow partner at Nelson Mull-ins. he founded the firm’s Information Manage-ment practice, which focuses on information risks and opportunities in areas such as data security and privacy, records management and e-discovery. he is a graduate of yale law. Jeff Woodward is a member of the Business & Finance Service Group in the Atlanta office of Stites & harbison. he has been a partner since 2008.

micHael H. trotter: you’ll all find a pack-age of materials that the daily report has put together for you here. It includes four papers that I have written, one on the transforma-tion of legal services in the legal commodities, which was published by the daily report last fall. the second one is a chapter from a “pig in a poke?,” which was published by the American Bar Association in ‘67. And a book titled “raise the Bar—real World Solutions for a troubled profession.” And then there is the piece that launched my career, as modest as it has been, as a legal futurist, which was a speech to the corporate counsel section of the State Bar in 1990 that was published verbatim in the daily report. And in looking back over it last night, I thought well, we finally had gotten there. It took 20 years for the things I was concerned about to finally bite hard, but here they are. And finally, there’s a short piece called “the road to oblivion,” which really deals with the impact of continuing increases in first-year compensation in law firms.

I think there are five key developments that are driving the restructuring of the legal profes-sion and legal services. they are competition,

“Constructing Legal Strategy in the New Economy: Alternate Servicing and

Billing for New Value Propositions”

4 2009

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cost, corporate counsel, modernization and technology. Sixty years ago, there were 22,000 lawyers in America, that was one for every 695 Americans. today there are 1,162,000 lawyers in America, and that’s one for every 261 Ameri-cans. that is more than a 400 percent increase in the number of lawyers on a population growth that has been less than a hundred percent. So we have a lot more lawyers than we used to and there are many more relative to the population. Not only do we have more, but they’re much better educated. It’s attributed in part to our law schools that have gotten much better and also to continuing legal education programs that have expanded tremendously, and they’re far more books, law reviews, legal newsletters and the like available to all of us. So we have the largest, smartest and most competitive and competent bar we’ve ever had. And that has led to a tremendous amount of competi-tion between law firms for business that’s avail-able. higher costs are the next factor and the costs are not only because there’s more legal work, but because the cost per unit has gone up tremendously. Inflation since 1960 based on the consumer price Index has been 640 per-cent. the hourly rates charged have probably exceeded and grown in excess of inflation by a hundred percent or more. And a great deal of leverage has been built into the system that did not exist in 1960.

If you look at “pig in a poke?,” you will see the associate-partner ratios in many of the major firms starting in 1950. I got this information out of Martindale-hubbell. the New york firms, for the most part, not all, but for the most part, did not mention or disclose their associates in 1950. they did not list them. So it is not possible to look there and find out how many associates they had except for the few firms that did dis-close that information. one of which was Skad-den Arps, and I think they had two associates and four partners.

And, of course, we’ve created all these billing categories that didn’t exist in 1960. legal assis-tants did not exist. We did not have non-equity partners. We didn’t have contract partners. We didn’t have investigators. We didn’t have docket managers. We didn’t have case managers and so forth. the gross revenues in 1986 of the Am law 100 were $7.2 billion. Adjusted for infla-tion, that would have been $13.24 billion. In 2006, the gross revenues were $56-plus billion, an increase of about 328 percent in real dol-lars. of course, most Am law 100’s are bigger today than they were in 1986, and that’s part of it. you also have to remember, however, that fewer companies had large legal departments in 1986, and those that had them, have larger ones now, for the most part. And if you com-bine the expense of the legal departments, the much larger legal departments with the much increased fees from the private sector, the total cost has gone up extraordinarily.

If you’re interested in how the profession has

grown and how the cost and leveraging and so forth have increased, “the profit and the prac-tice of law” is still available at Amazon.com and I think you might find it interesting.

there are three other important factors that are contributing to the restructuring: corporate counsel, modernization and technology. Why do I say corporate counsel? corporate counsel virtually did not exist in 1960 in Atlanta. coke had a general counsel. Southern Bell had a legal department. When I started at the Alston firm in 1962, it did not have a single client for whom it was principle counsel that had an in-house lawyer. that included the citizens & Southern National Bank, which was the largest bank in the southeastern United States, and also included Genuine parts co. and Magic chef, a Fortune 500 company. It included the cotton producers Association, which was the second- or third-largest agricultural cooperative in the country, and there was not a single in-house lawyer for any of those companies. there were fewer legal departments than in-house general counsel. the in-house lawyer was very often one person, always a guy in those days. And his job was to select and coordinate outside counsel. he did not give legal advice to his client to speak of and didn’t supervise other in-house lawyers.

In today’s corporate world, general counsel are very different folks. they are seasoned pro-fessionals who are smart, focused and practi-cal. they know how much particular services should cost, and they’re knowledgeable and astute purchasers of legal services. And they also know how many good lawyers in law firms are out there and how anxious they are to have your business.

the fourth factor in the restructuring has been commoditization and I won’t go into any details there, but the article from the daily report spells it out. how much of the work performed by Am law 200 firms are commodities these days? In a recent article in the chicago lawyer, home commoditization, the general counsel of FMc technology is quoted as saying, “85 percent of the matters any competent attorney could do. Another 15 percent requires more sophisticated skills.” My own estimate is that 60 percent to 80 percent of the legal work can properly be clas-sified as a commodity.

last but not least, technology includes copi-ers, scanners, computer software programs, the Internet, none of which existed. there were copiers in 1960, but nothing else. So it’s been a world of change, and it has enabled these other changes to take place.

I want to mention briefly a book that you should all be familiar with, “the end of law-yers?” there’s a question mark at the end of that. And the conclusion is that there will be lawyers, but they’re going to be different. this is by richard Susskind, who is the real futurist in the legal profession, an english lawyer who’s written several books, all good. And he fore-sees dramatic changes in the profession over

michael H. trotterPartner

Taylor English Duma

Michael H. Trotter, a partner in the Atlanta law firm of Taylor English Duma LLP, has practiced corporate, securities and business finance law since 1962. A graduate of Harvard Law School, Trotter has taught securities regulation at Emory University Law School, as well as courses in law firm management and economics. He frequently writes columns for the Daily Report, and his writing also has appeared in the American Bar Association Journal, the National Law Journal and the Georgia Journal of Southern Legal History.His book, “Profit and the Practice of Law—What’s Happened to the Legal Profession,” was published by the University of Georgia Press in 1997. It is widely recognized as the definitive work on growth and change in the legal profession in America from 1960 through 1995. He is also the author of “A Pig in a Poke? The Uncertain Advantages of Very Large and Highly Leveraged Law Firms in America” that appeared as a chapter in “Raise the Bar—Real World Solutions for a Troubled Profession,” published by the American Bar Association Press in 2007 after a yearlong effort of the Litigation Section of the ABA to address working conditions in the profession. Trotter has served as the principal securities lawyer for more than 18 public companies. He has represented borrowers in debt financings ranging in amounts up to $525 million and he has represented acquirers and sellers of business of many different sizes and types.

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the next 10 to 20 years. he anticipates there will be a new interface that will emerge between non-lawyers and the law because of the Inter-net and technology. Individuals will be able to find their law just like they can find their stocks, they can find their flights on the airplane and do a lot of other things. he says we will witness the end of many lawyers as we know and recognize them today. And the birth of a new streamlined and technology-based generation of practicing lawyers who are fit for the purpose of the 21st century. Among the legal service providers he thinks who will come of age are the legal knowl-edge engineers, legal risk managers. the law’s a very conservative profession, and most lawyers look backward for answers rather than to the future. that’s what we’ve been taught to do in law school, for the most part. Susskind notes in the book a strong resistance in most major U.S. law firms to addressing the various issues that he’s raised. And as he has said more than once, it’s hard to convince a partnership full of mil-lionaires that they’ve got their business model wrong and need to change it. I think competi-tion costs, corporate counsel commoditization and technology will continue to squeeze out-side lawyers and will continue to affect dramati-cally how law is practiced and we all need to search for improvements and how this will be done.

micHael Veysey: My topic today is budget techniques for in-house counsel. I’m sure all of you who are in-house have your own individual techniques. let me tell you a little bit about my background. When I came to Scientific-Atlanta, it had approximately 30 people in the law depart-ment. I’d say 16 were attorneys. Most of the attorneys were here in Atlanta and then we had our european headquarters in Belgium. Scientif-ic-Atlanta was acquired by cisco Systems Inc. in February of 2006. We integrated the law depart-ment very quickly. cisco has approximately 220 people in the law department worldwide. they have approximately 160 attorneys in 20 differ-ent countries. It’s managed by Mark chandler who’s the general counsel. Mark has been a big proponent with respect to delivery of legal services and how you can leverage technology to improve overall efficiency. I would agree with what Michael trotter said in terms of the standardization or the commoditization of the work, maybe probably 60 percent to 70 percent of our work is standard. our bread and butter is revenue. cisco does about $40 billion a year in contract revenue. that’s the life blood of the company. We have both commercial attorneys as well as contract negotiators. they have really the lion’s share of the work.

the other major areas of cisco include a liti-gation department. We have an employment department. We’ve got a patent department. We have a securities department and corporate governance. With respect to the standard work, we have flat-fee agreements throughout the world with major law firms. For example, some-

body like Morgan lewis handles all of our com-mercial litigation. We have a firm that handles all of our immigration work. We have probably two or three go-to Ip firms and these are firms that are familiar with both cisco’s technology and Scientific-Atlanta’s technology. probably our biggest risk area today is in the patent infringement area. We have probably 30 in the Ip area. And the way we’ve divided that up is we have an Ip strategy team and then we have an Ip disputes team. And then we have an Ip litiga-tion team. We try to take an early assessment of any type of patent assertion and see if we can resolve it, but as probably most of you know if you’re in the technology area, today many of our cases are coming from patent holding com-panies that have no business other than they own patents that arguably are in our particu-lar space. For the run-of-the-mill work, we have these flat-fee agreements. those are negotiated every year. With respect to the major pieces of litigation, the key issues for the company, what we do is we have a preferred provider list and from that list, we will have so-called beauty contests to select an attorney and it’s typically somebody that we’ve had experience with. We do our budgets on a fiscal year basis. We get an annual budget from the outside firm and then every quarter, about two weeks before the quar-ter, we will dialogue with the outside firm and say what do you think the spend is going to be for the next quarter. they manage it from their side. In my experience, the most effective tech-nique is getting realistic budgets from your out-side counsel. And that’s not to say things don’t change. If you have a materially adverse change, you can sit down and renegotiate it. But when we get a budget, we expect the attorneys to stay to that budget. We understand who’s going to be on that case. We’ve had instances where when we get the bills and somebody who has not been identified is that case, and we will not pay for that attorney and our outside counsel know that.

the other thing that we’ve done, particularly in this past year, is cisco worldwide has asked the corporation to cut $1.5 billion out of expens-es. So there has been a moratorium with respect to all travel and hiring. the only exception to the hiring is if it’s a critical program.

We’ve experimented with alternative billing techniques, particularly in our high-profile liti-gation. What we’ve done in the past is for the first six months of a particular case, we’ll set fixed fee with the outside counsel. then at the end of that six-month period, we’ll sit down with the counsel and we’ll look at it and say, all right you’ve got a better view of the case now and you tell us where you think this case is going. And then we set up a second fixed fee and that second fixed fee will be all the way through trial and all the way through appeal. And then what we do is we’ll bill into that a success fee factor. So if they settle the case within a certain range, they get a certain percentage. If it’s a directed

michael VeyseySenior VP and General Counsel

Scientific-Atlanta

Michael Veysey joined Scientific Atlanta in January 2003 as senior vice president, general counsel and corporate secretary. In addition to providing leadership and direction to the company’s domestic and international attorneys, legal staff and outside counsel, he also is a member of the company’s Corporate Management Committee. He joined Scientific-Atlanta following 22 years at Gould Electronics Inc., a subsidiary of Japan Energy Corp., where he was senior vice president, general counsel and corporate secretary. He has extensive experience managing a multi-national corporate law department. His areas of expertise include domestic and international acquisitions and divestitures, commercial and government contracts, criminal and civil litigation, compliance and environmental proceedings. In addition, his experience at Gould included, restructuring and managing multiple discontinued businesses, reducing high exposure legacy liabilities and successfully recovering more than $100 million in insurance recoveries.His legal career includes judge advocate service in the Marine Corps where he served as a certified military judge and trial counsel at military courts-martial and administrative proceedings. He is a retired colonel. Prior to joining Gould, he was a commercial litigator in Washington with a private law firm. He attended Boston College Law School.

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verdict or a complete win for the defense, then they get the total fee, whatever you’ve negoti-ated. And then it decreases after that.

It’s a real partnership relationship with out-side counsel. there’s no excuse for somebody not to pick up the phone and tell you we’ve got a new development on the case and we think we’re going to run over budget.

donna K. leWis: you know, it occurs to me that some of what you’re saying really is about better communication at the front end of the project to allow outside counsel to serve as an extension of your in-house department. It sounded to me like you look for people who understand your business so that they can add value to the process.

What do you think about non-attorney time-keepers and their role in reducing legal costs?

Veysey: We’ve used non-attorneys in terms for discovery and in document production. our contract negotiators, they don’t have a law degree, but a lot of them are very, very experi-enced.

leWis: have you used legal process outsourc-ing?

Veysey: We haven’t used legal outsourcing and maybe it’s because of the size of our depart-ment. We’ve tried to do everything we possibly can in-house. that we have probably 15 attor-neys over in India that support our operations in India. We have over 10,000 people in India and we have a whole group of lawyers just dedicat-ed to that—that business.

robin sangston: I was going to say on the billing guidelines, we have billing guidelines and there’s lot of meaty stuff in there, but the one thing that is relevant when you’re talk-ing about the communication side is each law firm is assigned an in-house counsel contact and they’re not allowed to do any work and bill any work on the matter unless they’re working through that in-house counsel contact. the days are gone when the business person was allowed just to pick up the phone and call the outside lawyer and let the clock start running. We’ve really reined that in quite a bit. And once again, the economy has been very helpful in shifting everyone’s attention. the business peo-ple used to have those long-standing relation-ships, golfing buddies, and we had a hard time getting the message through to those people that you probably are not being as cost effec-tive as you can be. And if you worked through us in house, we will help you save money and help you meet your budget. So we’ve had good support for that and I think the economy has helped that quite a bit.

on the outsourcing, I have a senior paralegal who manages our entire e-discovery process, which we brought in almost entirely 100 per-cent in-house. We’ve invested in all the technol-ogy. We have hired all the human resources and now we can work any e-discovery matter from beginning to end doing everything except the attorney review of the documents and that we

outsource to contract lawyers. We have teams of contract lawyers set up with reliable search or outplacement firms where we know we’re get-ting quality folks. And those people are doing the document review at 25 cents on the dol-lar of what it would have cost in the old days when you had associates in law firms reviewing those documents. But I have a senior paralegal managing that. I took another senior paralegal and I turned her into our law department tech-nologist where she manages our e-bill solution, manages all the Internet activity in the depart-ment.

sangston: And then I have another senior paralegal who functions under the direction of an attorney resolving disputes, negotiating resolutions and closing them out. So I think that law departments are getting a lot savvier about using the limited resources that we have now. I have had two openings I wasn’t allowed to backfill and our budgets were cut 5 percent. So I’m trying to do more with less and we have to be very, very creative. And I think that we’re never going to go back to the way it was with the continuing trends and more technology, more alternatives.

steVe cooper: how do you manage the budget process? do you centralize it at your level or do you push it down to the attorneys in your department to work directly with outside counsel?

Veysey: We set it and then we’ll look at the spend. So every month I get from our finance people what our actuals are for that particular month and then when you’re going into the next quarter. And it all rolls up from all of the attorneys within the department. And then we have actual sign-offs in terms of, say, this is the number that I’m committing to for this par-ticular quarter. And what we’ll do with outside counsel, particularly with the high-profile case, is we’ll have a sign-off from the outside counsel that this is their budget for the next quarter.

cooper: In reviewing your attorneys on an annual basis or for bonus purposes, do you hold them accountable for managing their particular piece of the budget?

Veysey: probably say 10 percent of their qualitative portion of the bonus is meeting our budget.

sangston: Very similar. I get monthly reports, not quarterly. So every month I get to see how we’re doing against our budget.

WoodWard: I wanted to talk just a little bit about some of the themes and maybe just link them together with technology. everybody’s looking for some sense of legal value. how do we get value out of the time that’s spent by outside counsel? We find that communica-tion at the beginning is important, particularly if we’re negotiating a fixed-fee arrangement on a business transaction. We want to have a very fundamental understanding of a couple of things. one, what type of information does in-house counsel or their staff want to have? how

Jeff d. WoodwardPartner

Stites & Harbison

Jeff D. Woodward is a member of the Business & Finance Service Group in Stites & Harbison’s Atlanta office. His practice focuses on corporate general services, emphasizing privately held entities; commercial contracts and transactions; mergers and acquisitions; and private placements and corporate finance. He also represents for-profit and nonprofit clients in real estate and affordable housing transactions.Prior to joining Stites & Harbison, Woodward was a partner from 1999 to 2008 at Foltz Martin in Atlanta. Before that, he was an associate at Holland & Knight in Atlanta. He is a graduate of Notre Dame Law School.Woodward is chairman of the board (2007-present) and instructor (1987-present) of The Edge Connection, a nonprofit organization dedicated to providing microenterprise training to low- to moderate-income individuals. Woodward was the founder and chairman of Community Redevelolpment, a nonprofit affordable housing organization, and the founder and prior chairman of the Atlanta Community Toolbank, a nonprofit tool and materials distribution company.

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Jon a. neiditzPartner

Nelson Mullins Riley & Scarborough

Jon Neiditz is a partner in Nelson Mullins Riley & Scarborough’s Atlanta office and co-leader of the firm’s Information Management Practice. His practice is focused on assisting clients to meet the legal and technological challenges of electronically stored information, including managing risks and costs of e-discovery, developing and implementing records management programs when much business-critical information is in electronic communications, and preventing information leakage and privacy issues. Neiditz has represented many clients in connection with breaches of information security and across a very wide range of other privacy matters. All such work involves assistance in the transformation of the role of in-house counsel and of control over electronic information, and Neiditz combines legal with organizational consulting services to meet those needs, drawing on his background as a national consulting practice leader for a Big Four firm.A graduate of Yale Law School, Neiditz has a broad background as a financial services and health lawyer, general counsel and business consultant.

much participation, how much do they want to be in the loop on the work that’s being done? how many people do we need to cc on and who needs to know on e-mails that are going back and forth? And if they see more people in a string of e-mail cites, they want to know how many lawyers you have on this particular mat-ter. We negotiate up front who’s going to be on the team. do you like a large team? do you like a small team? do you want a lead contact? And every in-house counsel is slightly different, but if we don’t have this discussion in the begin-ning, we find that the cost projections can be way off. Are you an in-house counsel that likes to use paralegals? We have a team of paralegals we can use and bring in on a transaction and use very effectively. different in-house coun-sel have different feelings about that. So these types of discussions in the beginning we find to be very, very fruitful.

one of the other pieces is how we can better manage access to documents and to historical transactions that we have worked on for you. I was at a lunch a couple of weeks ago with an in-house counsel and she had lawyers in a number of different countries. And she had to quickly get out a non-disclosure agreement. She said I probably have 20 of these things, but I don’t remember where was the last one, where it came from or which law firm did it and I’m prob-ably going to end up calling one of the firms and having them produce another one. Well, we hear this time and time again and we come from a law firm, a business perspective, manage doc-uments for our transactions in house in a very logical manner. We’ve now taken that docu-ment management system and made that avail-able to our clients and our in-house people in particular. So we take a lot of those documents and we have a button on our Web site that says client info, you can sign in. It’s secured. they can go in and find a series of folders of documents that we have worked on for them. We have a place for, for example, company documents. So that they don’t have to call a lawyer or parale-gal in-house or at the outside counsel’s firm to get a copy of sets of meeting minutes, find out where the stock certificates are, what was the last one that was issued, options, warrants and things like that. We make that available and we keep it up.

Another area that they like to go to a lot is if their business people have to have documents that they need to access with some degree of regularity, we make that information directly accessible to them so they don’t necessarily have to pick up the phone and call counsel. then for some companies, they want to have shareholder information. We keep track and help them keep up with their annual reports and so forth on the site. they can give shareholders who have an interest also a secured access to the site.

the third group is the employees. A lot of com-panies have a difficult time—their hr depart-ments—keeping up with some of the changes

in the legal documents, employment agree-ments, employee manuals and things like that. We put up a lot of that information and their employees can have direct access to that type of information. that way, there’s no confusion when there’s been a change in the employment manual. We found out that different companies have a comfort level with that. All of them have a different set of security protocols. And on price, it’s not only a direct lawyer cost, but long-term how can we create value. If in-house counsel has paid good money for legal work, we want to make sure that they get full value out of it, can go back to it and can access it easily, quickly and efficiently.

sangston: let me ask you a question, Jeff. And this is principally for clients in small, in-house law departments or no in-house law departments or smaller corporations that don’t have the resources like Michael’s company?

WoodWard: It’s primarily for that. the larger companies will have this database, but I’ve also been amazed with the calls that we get from companies with large databases where we have to check a financial ratio and a senior debt cov-enant some place in a transaction from three years ago, can you guys pull that for us.

sangston: Is this a proprietary database that you guys built yourself or is this an off-the-shelf?

WoodWard: No, it’s an off-the-shelf. Veysey: We have an erM system, enterprise

record management. And we load all of our contracts onto one single database. So attor-neys throughout the world can do a search for any particular document, any particular term. I mean, cisco’s got all these playbooks for every deal that they have done. It’s a tremendous informational tool putting everything in this database.

partlett: May I turn to Jon now.neiditZ: What donna and I do relates to those

enterprise records management and database systems of larger companies, as well as their other risks and opportunities associated with the management of information. our work gives us insights into what makes this panel so timely and important. What’s so exciting about it is that the evolution to which Michael trotter has referred has been “schismogenic.” that is a term from Gregory Bateson, an anthropologist who came up with it in the 1930s. the term has been adopted by linguists now to talk about human relationships, but he was talking about social and economic systems. What I mean by it is that law firms haven’t really evolved in response to client needs. As Michael’s books and articles point out, the internal evolution of law firms has been geared more to profit maximization and other opportunities for the law firms. As with the other schismogenic crisis we see happening in our economy, that type of evolution creates an opportunity to hit the reset button, and in-house counsel has the opportunity to push the reset button on the legal profession.

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robin sangstonVP and Associate General Counsel

Cox Communications

Robin Sangston is vice president and associate general counsel for Cox Communications. She joined Cox Communications in 1995 as its fourth attorney. She was promoted to senior counsel in 1998. In 2000, she was promoted to vice president and assistant general counsel. Currently, she oversees all of the operations of the Legal Affairs Department. Prior to joining Cox Communications, Sangston was an associate with Dow, Lohnes in the firm’s Washington office. There, she specialized in litigation involving media companies.Sangston received her J.D. from George Washington University’s National Law Center. In 2004, Sangston served as the national chair of Women in Cable & Telecommunications, a nearly 10,000 member nonprofit organization whose mission is to develop female leaders in the cable television industry. Sangston supports a number of other organizations and initiatives dedicated to supporting women and minorities, including recently being nominated to the board of the Minority Corporate Counsel Association and previously serving on the board of the Atlanta chapter of Cable Positive, a nonprofit organization dedicated to raising AIDS awareness and funding AIDS education, research and care.

I brought a wonderful quote for those of you who follow legal academics on how much the reset button is being pushed in the broader economy. this is from Judge richard posner, who has just been reformed so that he now believes in regulation. Now, I have to read you this because it just gives you an idea of the opportunity we have in the legal profession. Judge posner says: “If you’re worried that lions are eating too many zebras; you don’t say to the lions you’re eating too many zebras, you have to build a fence around the lions. they’re not going to build it.” Now, this from the man who wrote once that the way to solve problems of child abuse in our society was a free market in baby sales. this is a man who really believed in market economics. So you’re seeing an abso-lute transformation of economic philosophy all over the country now, into we know not what exactly.

At the same time, we have a chance to really look at what the legal profession would be if it were designed now in response to the needs of organizations. So that’s the basic question that I’m going to ask. My client contacts are mostly in-house lawyers, and all of them face the same issue I faced when I was in house: you need to control growing legal risks in micro-regulatory environments, complex regulatory environ-ments and other complex standards and in the information society where everything is record-ed all the time. Moreover, you need to do this in more jurisdictions as organizations are global-ized, with fewer resources. So what are we in the legal community doing to help you with that?

Now, fundamentally, I would say that notwith-standing all the change that Michael trotter has talked about, the major revenue streams of law firms are the same as they were 200 years ago. think about the old guilds of barristers and solicitors. We now have corporate transactional lawyers and litigators who are the main revenue streams of law firms.

donna and I recently gave a talk to second graders on what it is to practice law. And imme-diately after that, I gave a talk to a group of partners at our annual partners’ retreat on the future of law practice, and the second-graders generally had some more imaginative ideas. Why is it that understanding of the law leads you to do one of those two things—litigation or corporation transactions—if the primary need of in-house counsel is for dealing with complex systems of compliance standards and risks across global organizations. I was known as an in-house lawyer before the era of compli-ance officers as the lawyer who looked under rocks. there are only so many rocks you can look under. So you need systems and other assistance to achieve compliance and risk man-agement. And if you look at the two guilds, cor-porate lawyers and litigators, neither of those guilds are ideally suited to providing corporate clients with the tools that they need to manage risks and achieve compliance. And both of the

guilds make money primarily when the in-house law departments are not able to do the work. of course, that changes some when you’ve got cisco Systems negotiating a pre-paid deal with Morgan lewis for all of their commercial litiga-tion. that creates an incentive for Morgan lewis to begin to change—to do risk management-related work.

And so incentives are critical and communi-cation is critical, as Michael, robin and donna said. But meanwhile, the great opportunity for law firms is that both of the two guilds are seeing tremendous erosion in their traditional franchises because of offshoring, automation and non-legal resource. the traditional pieces for which lawyers are responsible are getting commoditized, as Michael trotter has said. But there’s another side to commoditization to which trotter has never spoken. In the consult-ing world, from which I come, what you’re trying to do at all times is to design products that do not exist yet in the marketplace, but meet criti-cal needs. And so if we started from ground zero and we ask, “What would the legal profession be if it were designed to respond to the needs that organizations have?” then what you find yourself doing is something that is not a com-modity activity at all. Indeed, it’s the opposite of commoditization. the creation of new prod-ucts and services is first and foremost a strategic activity. It’s an exciting activity that requires a lot of creative thought, and any new product involves strategic non-commodity components and commodity components if it’s going to be efficient. this is an area that may sound some-what abstract, so let me go back to this example of the need for new types of compliance and risk management counsel.

one of the things that Susskind talks about in his book is that law firms have resources to develop the kind of compliance software that legal departments need, which are often not the same kinds of software that their organizations are supplying to them. Now cisco and cox may be exceptions to the rule here, because they are information-focused organizations, but most of the organizations that I know aren’t providing their legal departments with budgets to create legal software. So there’s the opportunity for law firms to create products.

let me mention Susskind’s five types of law-yers of the future. there’s still the expert-trusted adviser. that person still exists, but there are only a few of them. And then there’s the thing called the enhanced practitioner. the enhanced practitioner is something of which I’m doing a lot more of, where you’re essentially an adjunct to the software services that you’re providing when they actually need to speak to someone. then there’s the legal knowledge engineer. this is in some ways the most challenging new type of lawyer that Susskind talks about. the legal knowledge engineer is designing the systems that produce what’s needed in order to meet the legal needs of the organization. there’s a

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steven d. cooperPartner

Stites & Harbison

Steve Cooper is a member of the corporate law group at Stites & Harbison. He has experience in mergers and acquisitions, negotiation and preparation of commercial agreements and distribution and supply agreements; corporate finance and international business transactions. Cooper also has advised clients on wrongful discharge, discrimination and other aspects of employee relations. Cooper has counseled numerous companies engaged in the direct sales of goods and services in the United States and overseas.Before joining Stites & Harbison Cooper was a partner with Varner Stephens Humphries & White. He also has served as senior vice president and general counsel of Electrolux Corp. from 1973-1998. Cooper began his legal career as an associate with Dewey Ballantine in New York City.A graduate of Columbia University School of Law, Cooper has served on the Columbia College Alumni Council since 1997 and is the former president of the Columbia University Club of Atlanta. He is a member of the National Council of the American Jewish Committee and a member of the organization’s National Legal Committee.

gentleman there, rich Wyde, who practically is a prototype of a legal knowledge engineer with some of the things he’s designing. the legal risk manager is the fourth type, and all of us who have been in-house counsel are very familiar with that fundamental role, but that would be seen as a really important component of the profession. And finally, the legal hybrid. that involves the law working with other modes of thought, other disciplines in order to be able to create value. Imagine, replacing the two guilds that I mentioned before with these five types as if these five types were different components of the profession. And I’m not suggesting that Susskind’s types are the right types, but when you start from square one, the opportunity is great to really design something that’s very useful.

sangston: May I react? While that sounds really great and really wonderful, but until the economy turns around and my understanding is that’s not going to happen for three to five years, you’re not going to be able to sell me any software unless I can show that it saves me money.

neiditZ: right.sangston: So you have to show a direct

reduction in outside counsel spend or legal fees spend, hence, I can get money from e-bill-ing solution because I’ve been able to save a lot of money by implementing e-billing solu-tion and I’m going to be able to get better data and save a lot more money in the next three to five years by using the e-billing solution. But if you’re selling me software to do compliance right now, I’m going to use my in-house experts to do compliance and they’re going to put together a cross-functional team with business people, It people, a project manager. they’re going to come up with a system and a solution that may not be a fancy software program, but it will have a systemic capacity to it. And then we’re going to operationalize that, then we’re going to push it out, and then the in-house law-yer’s going to manage it. So I just think that it’s a great idea, but I’m not sure if the economy is ready for it.

neiditZ: that’s very well said. let me con-trast two of the techniques that I think Michael Veysey underscored so I can show you that it’s not as impractical as it seems. I think on the one hand if you take the story of Mark chandler and the big fixed-fee deal with Morgan lewis, I’m sure that there was a great deal of communi-cation there, but fundamentally that was a changing in incentive. And the change in the incentive is what created the transformation of role. Now, if you were to take your spend in a particular area of compliance, look to a firm to provide solutions, and if that firm had already developed solution sets that included all of the answers that you needed, you wouldn’t need to spend more for those solutions; you might well be able to spend less. I’m not suggesting that law departments are going to spend on

the software, but I am suggesting that if you change the incentives and you do flat-fee arrangements, that law firms can be creative in designing solutions that will have more long-term value for you and will cost less. And they will involve less of Jeff running to the file to find the document and giving you the document. When we’re doing this kind of thing, we’re not asking anybody to pay more, but we are look-ing at how to deliver our services better. take, for example, global privacy. We’re doing data-bases for every kind of security or privacy thing in the country or around the world, so to the extent that we can put those databases into systems that are available to clients with good search and data mining capabilities, everyone wins.

Veysey: Just on that point, one of cisco’s initiatives is what they call on-ramp exchange and this is both open to internal and to out-side attorneys. Basically, it is like open source in terms of exchange of information. So if we have a particular subject matter, then it’s posted and if somebody has a comment with respect to that, they can weigh in. And we make that accessible to the law firms, as well. And what’s the incentive there? yeah, you’re saying well, I’m not charging you for that, but all of a sud-den we’ve identified and said, oh, this person has the subject matter expertise that’s going to fit right in with the particular issue. So where do we go in terms of retaining outside counsel?

neiditZ: one of the keys here is when you’re creating new kinds of partnerships, where does the expertise lie? Now, when you’re deal-ing with cisco as opposed to any law firm, the expertise on any information system lies with cisco. let’s assume that. And so what you want to do is create interesting ways of integrating the lawyers into organizational systems that you provide. For others, law firms can help pro-vide the organizational systems that a strapped corporate law department cannot. But how do you do it? how do you do it when you’re a law department and you’ve got certain processes you go through with the It department for any new It product and it’s a two-year process? Well, maybe there are compliance solutions that are Internet-based that are available to you and that can actually work where you don’t have to go through that kind of process. But robin’s point is very well taken, that the object has to be to do everything cheaper.

trotter: I think we have to recognize that the Brits, the Magic circle firms, have been ahead of the U.S. firms for the most part in terms of knowledge management. they have had full-time lawyers on their staff who do not work for individual clients but who manage the firm’s knowledge resources, think about ways of packaging those and making them avail-able to clients that are different from the tra-ditional ways of doing things. And we’ve had some law firms in the United States who, one way or another, stumbled into this thing. one

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david F. partlettDean

Emory School of Law

David F. Partlett assumed the deanship of Emory Law on July 1, 2006. He is the Asa Griggs Candler Professor of Law. Partlett previously served as vice president, dean and professor of law at Washington and Lee University School of Law for six years. He joined the faculty of the Vanderbilt University Law School in 1987. He was a fellow in the Institute for Public Policy Studies and was acting dean from 1996-1997. Partlett held positions in the Australian government as a senior legal officer for the Commonwealth Attorney General’s Department. From 1978 until 1987, Partlett was a member of the faculty of the Australian National University, and he served as associate dean from 1982-85. He is a member of the American Law Institute, the American Society of Law and Medicine and the Selden Society. He currently teaches torts and also has taught courses on judicial remedies and professional liability. He has authored books on torts, defamation and free speech, child mental health and medical malpractice. A native of Australia, David Partlett earned his LL.B. degree from the University of Sydney School of Law, an LL.M. from the University of Michigan Law School and an S.J.D. from the University of Virginia School of Law.

example would be Bryan cave. Bryan cave sev-eral years ago had a big employment practice. And somebody came up with the idea and said, well, what if we instead of handling all these cases, we came up with a seminar that would train our clients’ personnel on how to avoid these cases. Now, that requires an investment of capital and time that American law firms have been not enthusiastic about doing. you leave capital in the firm by making an investment in some product or service or software that would be available to clients and that’s taxable income to the partners in most cases because it’s a capi-tal expense and has to be amortized over time and the firms have really been focused on trying to pump out as much cash as possible and are under-investing, I think, generally in their intel-lectual capital.

sangston: I think every firm out there is under so much competition right now, they’re all chasing a smaller number of legal dollars and the savvy firms are the ones that realize that the relationships are the most important thing now and the law firm that offers me a two-hour cle for free on antitrust law or privacy or employ-ment and we get all our cle requirements at my firm for free, basically provided to us by law firms that want to come in and do a presentation on a subject matter area that they have expertise on. So I think you’re really missing the boat if you’re a law firm and you’re not taking advantage of those opportunities right now.

talk about the reset button; we have one law-yer from a law firm in town here who comes to our offices one day a week now for free and she does contract review for us. We have two other major law firms in Atlanta who offer us associ-ates for six months, one for free and one for a very modest amount of money that would be comparable to what I pay a special counsel or counsel on call kind of hourly rate, so there is desperation out there. the button has been pushed. We have a lot of leverage in house. I mean, it’s not that we want to take advantage of anything, we want to work with our law firms and help our law firms through these difficult times, but sometimes taking advantage of some of these opportunities might help an associate stay employed.

partlett: We’ve got some questions from the audience now.

a participant: out of say a hundred law firms that we use, 90 percent of them use case Met. Not one of them have ever said to us do you want to have access to these documents. So my question is: Why don’t they? If I don’t ask, they don’t tell. At the same time, they’re billing us or making copies and mailing them and Fed ex-ing them where the access is right there. that’s one part of the question. the other part is the legal research that law firms do, we never see it. they don’t send it to us. We just get the answer and that’s it.

neiditZ: this is a really critical question, how do we push the reset button? you know what

you want. one potential answer to that question is let’s work on an rFp, which spells out exactly what you expect from outside firms. you have the opportunity to make those changes.

Veysey: you said the legal research, you don’t get it, you get an answer. I think at that point you ask for it. that’s yours. And if there’s a memo that’s done by an associate and you want to see that research and the result of that, you just ask.

a participant: With respect, I don’t feel like this is really much of a paradigm shift. I think that people are still too anchored to the billable-hour model. Georgia-pacific has about 4,800 domain names, for example. We use a company now called Melbourne It. And Mel-bourne It hired lawyers who are now starting to offer services in a very, very nontraditional way as opposed to outside law firms. And all the stuff that they do is for It lawyers, and offer it to privacy as well. It is really on the edge of the law where the law has not really caught up with what’s going on. So I can’t really look at law as a commodity the way some people can. I have to really look outside the model entirely. And one of the things, for example, in privacy is I’ve got in-house policies. I’ve got tons and tons of need for database and documents. I got records management problems and e-discovery prob-lems and so on and so forth, we can go on for-ever. It’s all information management. It’s all data going over different pipelines. What I really need is somebody to come up with something that can combine everything and find it all, and give transparency to all the businesses. So give me free interns, reduce legal fees, give me flat rates, none of this really helps. I really need to smash the stone and build something else from the ground up. I really think that this anchoring to the billable hours is not enough and sooner or later there’s going to be some really success-ful firms that are going to start ground up and it will either catch on or it won’t. It may not catch on and the economy may come back and we may be re-anchored to the billable hour model, we all have more money. I really think the fun-damental paradigm shift if it’s going to work is not just bailing the boat out forever.

neiditZ: Where does this mechanism for pulling things together that he’s talking about, where is it created? And so one place that is a part of Susskind’s book, in fact, one idea for where it’s created is within specialized law firms focusing on the needs of multiple clients because it’s something of value to those clients. the question is, can we push the reset button to the extent that we’re able to create things of great value to one or more organizations? Among Susskind’s ideas is that lawyers from different firms will be expected to collaborate more in getting things done for different com-panies. clearly, the billable hours are a major obstacle as Jonathan said and yet it remains the rule in most cases. one of the things that is an accidental benefit in our law firm is we

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don’t really have billable-hour requirements, at least corporate lawyers don’t. We have revenue requirements. And so if we can figure out better ways to generate revenue, providing value to clients, in theory, the billable hours don’t mat-ter. I think more law firms need to move in that direction. Write-off reports are tyrannical and they force people to think only in terms of hours rather than in terms of getting the work done and value added.

a participant: I just want to say one more thing. I see the law worlds this antihybridization inertia, but if you look outside the law world, there’s plenty of things in hybridization. I never thought Wal-Mart would sell milk, but they do. Accounting firms didn’t used to loan money, but h&r Block loans money. Software companies didn’t used to offer free software, but turbotax gives you free software to do your taxes over the Internet. there’s all these different hybridization models outside of the legal world, so there’s no reason to think people are considering it and on a smaller scale start doing it.

neiditZ: In fact, you all may remember a few years ago there was the dispute within the bar on multi-disciplinary practice. At that time, I was a lawyer practicing within a giant consulting firm, and I loved being able to deal with people from every intellectual discipline as a team, just as in-house lawyers are able to deal with people from every possible intellectual discipline, but the bar took a position against multi-disciplinary practice, which is why we’re not all working for non-law firms right now. And so we have to work within that structure. It may be that ultimately the bar reconsiders that position because law firms have to provide more value.

partlett: this relates to the future. let me ask Michael to comment on that.

trotter: I think it’s very unlikely that law firms or legal departments will be the source of the changes. professor clayton christiansen at the harvard Business School has written about destructive recreation of enterprises and the basic case studies indicate that the leaders in particular industries are very rarely able to make the changes necessary to reform themselves because it’s so profitable and they’re so com-fortable with what they’re doing and what nor-mally happens is some niche player, someone appealing to a small piece of the market that’s been ignored develops a new concept or a new idea and then comes in and sweeps aside the established players. Now, certainly what we have here is we are still thinking about tinkering with the model that we’ve used for the last 60 or a hundred or 200 years as opposed to com-pletely changing that model. And it’s almost impossible for us to think of it as a possibility because we are so steeped in the old model.

neiditZ: Well, I’m not sure. I for one don’t feel steeped in it. I’ve been in big law firms only three or four years. We’re steeped to different degrees. Some of us feel like little open source guys working in garages, not like great represen-

tatives of the great institutions. the fact is that the open source world has tremendous poten-tial for law. you also see legal publishers com-ing in and doing tremendous things in terms of production of knowledge. yes, law firms haven’t done much, there’s no question about that. But the fact of the matter is that there’s noth-ing stopping us individually or as organizations from doing a great deal more than we’re doing. And the question really is, who wants to take advantage of this unique period?

sangston: It may only be tinkering and it may only be evolutionary and not revolution-ary, but I still feel that my company is benefit-ing from the current climate by being able to get something that approximates value-based billing where I can look at the body of legal work that I have and I can say oK, this is the bet-the-company stuff, this is the survival of this product, this is all our revenue generation, this is mission critical. Maybe I’ll still be paying for that at an hourly rate, but at least I have a bet-ter ability to negotiate that rate to dictate how I want that matter staffed, to talk about some of these other things. And then down here you have this commodity work that five years ago, I was paying some lawyer $500 an hour to review contracts, now I can use my e-billing solution and all the data I have and I can here’s a thou-sand hours of billable time, and I think this work is worth $200 an hour. law firm X, if you want it and you can figure out how to make money off of it, you can have it. otherwise, I’m going to either hire another in-house lawyer or I’m going to outsource it to a contract place and then all that work in the middle, which is the really good juicy stuff, that’s the work I’m going to save for my in-house lawyers because that’s what makes them want to come to work every day and that stuff is important to the company and it’s cutting edge and it’s working with business people. And I’m going to be able to make the case, again, because information is king and it’s cheaper for me to hire another in-house lawyer to do that than to outsource it to a law firm. So that’s not revolutionary, but it’s a different place than I was five years ago and I can say now I was asking heather this question, 40 to 50 percent of outside counsel billings now are moving into an alternative arrangement.

I wanted the dean to talk about the curricu-lum change because I was excited to hear about that. And I think there’s a lot you can do with law students who are twiddling their thumbs in the third year, if there’s still going to be a third year; I heard we’re going to move to a two-year law degree program. But if there’s an apprenticeship component or a drafting component to the cur-riculum where they’re learning to draft in plain english, practical business language and consis-tency, there’s definitely room for improvement there.

partlett: Absolutely. And I don’t think this is just a third-year thing. the way we’re conceiv-ing of this at emory is that it really starts in the

donna K. lewisPartner

Nelson Mullins Riley & Scarborough

Donna K. Lewis is a partner in the Atlanta office of Nelson Mullins Riley & Scarborough. Lewis focuses her practice on strategic commercial transactions, the majority of which involve technology, content, data or other intellectual property. She has experience structuring and negotiating licensing, outsourcing, procurement and services transactions, representing both buyers and sellers of goods and services. Much of Lewis’ practice focuses on products and services enabled by new technologies, such as the Internet, wireless, IPTV and digital cable. Her expertise also includes data privacy and security, digital rights management and electronic commerce. Clients include companies in the technology, services, media, financial services, telecommunications and health care industries. Lewis also has experience in general corporate matters, including entity structure and formation, venture capital, mergers and acquisitions, and protective commercial agreements.Before joining the firm, Lewis was senior vice president and chief legal officer for Turner Entertainment Group, the subsidiary of Turner Broadcasting System. Earlier, Lewis she was senior vice president of business development for CNN. Lewis also has been an associate at King & Spalding. She is a graduate of the Emory University Law School.

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first year. We’ve already now for two years had a transactional law program. the students are put to the task of looking at deals and trying to figure out how one goes about the lawyering of deals. how do you do it? capstone courses in the third year which would be rather special-ized say in M&A and securities. that would real-ly steep our students much more in the trans-actional side of law. As you know, law schools have mainly been on the litigation side. So this, I think, is a refreshing change.

leWis: Well, one thing that you mentioned using the term value-based billing, and I think it may go unsaid, but we’re all ethically charged with billing based on value. that’s how we’re supposed to bill. So I think that’s an impor-tant thing to remember, that that’s the ethical charge of the bar.

Secondly, in terms of just evolution, revolu-tion, whatever it is, we’ve got a lot of companies to look at right now that are not doing so well, that have not evolved and have failed to change their models and so I think that people will resist and I think that some won’t change their mod-els, but they may not be here in 10 years either. And in terms of how quickly you accelerate that change it depends on where you are in the mar-ketplace. If you look at some companies, they’ve not had to move quickly to new technologies. they’ve let other companies play in that space. Startups, I think of Media World, for example. Big media didn’t have to adopt all these new technologies and jump right in until they were comfortable figuring out digital rights manage-ment and issues like that.

partlett: Any other points from the panel? a participant: What I’m saying is that peo-

ple are losing sight of relationships and intan-gibles that come with relationships with good lawyers. So I kind of feel there’s a devolution of our business, if you will, not professionalism as much as the relationships. And I think a lot of work is going to get done worse, if you will, because you’re not going to have that trusted relationship and those intangibles that lead to success like end-technology projects.

sangston: I disagree. I think that the firms that are working with me and my folks to devel-op something that we believe is a value-based billing are going to develop a relationship, and we’re going to trust them more. I think where the lack of trust has come in is when you feel as an in-house lawyer that you’re not really getting your money’s worth, or why am I being over lev-eraged on this matter? Why is a partner doing this associate-level work? Why is this extra bill-ing on here? So I think it will engender most trust and improve the relationship.

cooper: looking at it as the point of view of the law firm, I agree 100 percent with robin. the more demanding the client, the more innova-tive the client in terms of requesting new things from us I think helps the relationship and doesn’t in any way hinder it.

neiditZ: I think it’s a different kind of com-

munication. It’s less on the golf course, more on the project.

a participant: What rich said before strikes me as the travel agency model where they used a lot of service and you paid a premium but now all these other businesses have innovated and they’re so much cheaper. And what a lot of people are doing now is they don’t like the fact that they get no customer service with this trav-elocity and any of the other services. So they’re going out to sites and pricing them and they’re coming up with what might amount to com-modity-based pricing and going back to the travel agency and say can you meet this price. I want the service at a cheaper price. I think that’s what people are doing with law firms. clients come to you and say can you do it for $250, but I want the same services. I think you are right, they want lower prices but they don’t want non-service.

a participant: I started teaching law in 1965. And when people say to me why do you do this, I usually say well, I won’t rest and I won’t retire until every American has their own indi-vidual lawyer, and apparently I’ve been moder-ately successful. I think the paradigm is shifting and I think I’m hearing that I want to produce less lawyers in the future, and law schools have to figure out not just what they’re going to teach, but how they’re going to deal with the fact that the demand for product is going to drop, not increase. I think the bar associations are going to have to just let it go and quit trying to use our guild mentality to keep the law firm in a traditional context. the paradigm is shift-ing and I think the corporate world is going to expect firms that have legal talent in them to have other talent. And that new law firm model, by the way, is not going to be with the kind of extraordinary income that some senior partners enjoy. It’s going to be much more like corpora-tions with a salary schedule.

sangston: I think all of this will ultimately lead to more happy lawyers. one thing that we haven’t talked about is the fact that, yeah, we’ve got all these lawyers coming out of law schools. We have all these giant firms with all this lever-age and we’ve had all these associates, fourth- and fifth-years churning away doing document production and doing redlining on big deals for the last five years and making a lot of money, but were they happy? No. they left law firms in droves. If they can get in-house, they’d come in-house, but Michael and I couldn’t hire all of them. So many of those people ended up leav-ing the profession entirely. I think what we’re talking about here is if this transformational shift happens, you get more people like donna and Jon who really like their job. you don’t have the sweat shop, big firms with associates churning away who are never going to make partner. So attorneys coming out of law school can kind of decide, how much money do I really need? What kind of a lifestyle do I really want, and what kind of work do I want to do? I think at the end of the

day it might result in happier lawyers.partlett: robin, that’s really an excellent

point because I think that when you look at the students who come into the top law schools in the country, they’re some of the most creative, energetic, talented people in our society. And we should be giving them greater creative opportunities in their careers.

WoodWard: From an in-house perspective, where would you like to see the next three to five years go in terms of building the capacities in house?

Veysey: From our perspective, where we spend the most money is with respect to litiga-tion. And in our particular case being a tech-nology company, it’s Ip litigation. And where I would see in three to five years is do you want to develop an in-house expertise so that if you are sued, you can bring in your own team to try that particular case. And go out and hire top notch litigators that have the engineering backgrounds and understand the technology and let them be your hired guns. I think prob-ably 80 percent of our budget of professional fees is litigation. We’ve got the other disciplines covered with these flat-fee arrangements.

sangston: that’s an interesting idea. that’s a bold step. It’s awfully hard to get money for one lawyer, much less five, but I wish y’all the luck and then I’ll copy your model. But litigation is the toughest nut to crack and I think we are going to move more and more in the direction of getting better budgets for litigation. Again, it’s all about the data and the information. you just have to make that sell on a business person. I think you will see some growth when the econ-omy picks up in in-house law departments and I think you’ll see more value-based negotiation with your law firm partners and you’ll see fewer outside law firms but they’ll have more work.

cooper: I’ve seen a trend where larger com-panies are doing more litigation in-house, but not the big piece, not the bet-the-farm stuff.

a participant: Well, that was the point I was going to make. When I was at coke, the gen-eral counsel wanted to bring more litigation in house and we staffed up to do it and the prob-lem is the challenge of staffing for valleys and not for peaks.

Veysey: Maybe it’s a hybrid. Instead of in-house counsel just managing outside counsel, they may play a much more integral role in the litigation of the case. take some of the depo-sitions, particularly of the technical people. there’s no reason why they can’t take the depo-sitions.

sangston: I do think in the litigation area, with respect to e-discovery, you are going to see more and more companies taking on more and more of that in house and then outsourcing the attorney review piece to contract lawyers because discovery is the biggest cost in litiga-tion and it’s been this big black box for years. And I think we’re finally getting the tools and the knowledge on how to do that better in house.