Lawyers charge their clients using a very common method called “billable hours.” For more than a decade, many companies have battled to eliminate billable hours. The method is prone to abuse, ineffective, and makes it difficult if not impossible to plan expenses.
Microsoft hopes to create affinity groups where lawyers from diverse backgrounds can connect with one another.
Now, different corporations have discovered alternative methods of tracking services, such as retainer services and fixed-fee, in order to cope with paying lawyers.
Microsoft Corporation wants to depart from the traditional arrangement of charging and paying by the hour. They announced that they want to shift 90% of their legal work into alternative fee arrangements that will last for two years.
Law firms are suprisingly important to the multinational technology company. It was never a secret that Microsoft engaged in various high-profile court cases. The company has been on both side of numerous trade can copyright suits globally, from the EU to China and the U.S. From copyrights to trademarks, Microsoft has fought the who’s who of digital tech, with companies like:
- Apple Incorporated
- Be Incorporated
- Caldera, Incorporated
- Bristol Technology Incorporated
- Opera Software
- Stac Electronics
- Sun Microsystems
- Zhongyi Electronic
According to David Howard, Microsoft Deputy General Counsel and Corporate Vice President, “We’ve learned that simply comparing the billing rates of different firms doesn’t tell us very much. Firms which work less efficiently usually cost us more, even if their billing rates are lower. Competing on the basis of a fixed fee or similar alternative fee permits a true apples-to-apples comparison. “
But he mentioned that the plan was not totally about saving money but more into strengthening relationships between Microsoft and the law firms that conduct its legal strategy.
Microsoft Corporation has another reason to do an alternative fee arrangement. The giant company aims to deepen diversity. Microsoft hopes to create affinity groups where lawyers from diverse backgrounds can connect with one another.
Even though the method of fixed-fee billing is beginning to take hold, many top law firms still practice a model based on the billable hour.
Law Firms that Said ‘Yes’ to Microsoft
After the announcement of plans, the following companies embraced the alternative fee arrangement model that Microsoft offered:
- Simpson Thacher & Bartlett – The New York City based company is known to be an international law firm that employs over 900 attorneys in eleven of their offices worldwide.
- Sidley Austin – The sixth largest U.S. based corporate law firm has 1,900 lawyers with an annual revenue of more than one billion dollars.
- Perkins Coie – Founded in 1912, the international law firm is located in Seattle, Washington.
- Arent Fox – The Washington-based company is not just a law firm but a lobbying group as well.
- Covington & Burling – The international law firm has 12 offices in 7 different countries. As of 2017, it has a total number of 1, 055 attorneys.
- Davis Wright Tremaine – The company is a litigation and a national business law firm that focuses in all areas of legal service.
- Fish & Richardson – Having more than 400 attorneys, the company is a commercial litigation, global patent, and intellectual property litigation law firm.
- K & L Gates – The international law firm has 45 number offices and was founded in 1883.
- Greenberg Traurig – With a revenue of US$1.4 billion, the international law firm has a total number of 38 offices.
- Merchant & Gould – The company is considered as a property law firm.
- Latham & Watkins – With US$2.823 billion in annual revenue, the company is now deemed as the world’s highest-grossing law firm.
- Paul, Weiss, Rifkind, Wharton & Garrison – The international law firm focuses on litigation, corporate, representation, personal, and entertainment law practices.
- Orrick – The company is an international law firm that has more than 25 offices in different countries.
Microsoft is stepping up to the plate, to create a more predictable way to purchase legal services. This is a bold action that is sure to have impact on the legal profession in coming years.