GE’s Paul Slater Says Spending Wisely with Preferred Law Firms is Good for Companies — Especially During Tough Times
By Tom Hagy
Paul Slater, Senior Counsel of Corporate Environmental Programs for the General Electric Company will be one of the panelists on the Jan. 26, 2011, LexisNexis Web event titled “Early Case Assessment & Resolution Webinar for In-House Counsel & Outside Law Firms.” To register for the free program, go to http://www.eventsvc.com/litigation/.
I spoke to Paul from his office in Fairfield, Connecticut this week to get a preview of what he will discuss. My takeaway is that a tighter corporate budget means people like Paul have to spend even more wisely to ensure companies are protected, and part of that means fully leveraging relationships with outside law firms to get through tough times. Read on to see what Paul had to say.
Q: First, what will you discuss at the webinar?
A: The overreaching issue we’re trying to address is how to manage complex and toxic tort litigation where cost is a major concern. At the end of day in most litigation, as much as you would like to control your spending, you find more often than not that if you cut too many corners at the outset you end up paying in the long run.
Q: Do any cost-saving methods stand out?
A: The biggest issue you’re seeing today is the use of creative billing arrangements, such as flat fees and working with preferred providers. It’s valuable to work with preferred firms as you develop a familiarity with their expertise and you don’t have to re-educate or reinvent the wheel whenever you get a certain type of case. It’s very much a relationship between the company and the firm that makes things work.
Q: Do you think firms feel as though companies are asking them to make less money?
A: A lot of law firms may not want to hear it, but it’s no longer about a law firm coming in and expecting companies are just going to accept an arrangement where the firm bills hours and gets paid on the case. Today, it’s going to be “we’ve used you in the past and you know you’re a preferred provider. We look to you to come to us with ways to handle cases in the most cost efficient manner.” So it’s more of a partnership than it is anything.
Q: So flat-fee deals are the way to go?
A: The flat-fee arrangement is something we’ve used extensively. But it is not something you use in individual cases. It is something you see in cases such as toxic torts or pharmaceutical litigation where you have multiple case filings in a certain type of litigation. In these situations there is predictability both for the firm and for the company. It’s very difficult for a flat-fee arrangement to work in a one-off case because there is no understanding of what work is entailed. But when you have litigation where there are multiple claims over a number of years both sides start to get a comfort level as to what is required in order to defend the company’s interests.
Q: Why not simply require flat fees?
A: The arrangement can’t be forced by either side. A firm is not going to want to work under a flat-fee arrangement in a situation where they don’t have any certainty or any idea of what the work is going to entail. There’s nothing worse than marketing your firm under some flat-fee arrangement and then end up finding you’re not making the type of money you should make.
Q: Do firms come to you with ideas to spend efficiently?
A: They do. The litigations I am involved with are a relationship-based type of practice. You understand which people firms have working for them. You know their strengths and weaknesses. You know when they should work on a certain type of case and what types of resources they should put on a case.
Q: Do firms come to you and say “We’re in this relationship for the long haul?”
A: Yes, those conversations do take place. Firms that specialize in certain areas look for that type of certainty with their clients. Especially when you look over the past couple of years and the difficulties we’ve all had in the business environment with cutbacks and either keeping costs fixed or reducing them. As in-house counsel you are going to be more successful in achieving necessary cost control if you have long-standing relationships with firms. There is no question that smart firms out there have been willing to work with tougher legal budgets over the past couple years with the hope and expectation that as things improve it will pay off for them.
Q: So it’s a reality that corporate legal budgets have not been immune from budget cuts.
A: No question. In the environment we’ve just come through companies attack the soft costs such as going to conferences and putting young associates on cases in an effort to educate them at the expense of a client. Those costs are monitored very carefully. Also, the numbers of billing entities within a law firm that will work on a case are examined. That’s one of the easiest ways to cut costs on a file is to state, for example, that only three named lawyers may work on a file and no one else is permitted to do so. As a case gets passed around to an undefined group of attorneys, getting attorneys up to speed has a cost to it.
Q: Which cases warrant heavier up-front spending?
A: In mass torts where you’re going to see a number of cases arising out of some product liability — that’s where you find that more money spent early on will help avoid mistakes that you end up paying for throughout the duration of the case.
Q: What’s the money spent on?
A: Discovery. Understanding the strengths and weaknesses of the case. And that’s internal and external. All activity around gathering evidence, deposing fact witnesses, deposing experts, reviewing internal documents, internal communications, and understanding the requirements of e-discovery – something to address even when you don’t have litigation. Money spent early on is money well spent. It allows you to assess the liability exposure a company has so you can make a determination early on whether there is value in settling the cases or seeking a resolution of the cases early or litigating the case depending on what you learn.
Paul F. Slater is Senior Counsel, Corporate Environmental Programs, at General Electric Company. In this role, Paul has presided over GE’s strategy in a number of the company’s most complex litigations in the areas of toxic tort. He has played a leading role in designing and implementing GE’s strategy in its asbestos litigation, including overseeing GE trials in a number of jurisdictions, including San Francisco and Madison and Cook counties in Illinois. Paul is also involved in internal health and safety policy and provides counsel to GE regarding general environmental liability and risk issues, including working on product liability issues associated with existing and new products. Paul is a graduate from Brooklyn Law School (J.D., 1987) and Hamilton College in Clinton, N.Y. (B.A., 1984).