GE’s 12 percent reduction in costs between 2003 and 2005 from a 75% reduction in firms used

When Brackett Denniston became General Counsel of General Electric Co. four years ago, the company used 450 outside law firms. Denniston thought that many of those firms were not used enough for them to develop a strong feel for the company’s products and needs, according to a profile of him in Corp. Bd. Mbr., Vol. 11, July/Aug. 2008 at 76-77. He unsheathed a convergence program.

The article notes: “Today 108 firms get the bulk of GE’s business, which resulted in a 12% reduction in costs between 2003 and 2005, the latest year for which there are final figures.” Does that mean about four percent per year for each of 2003, 2004 and 2005? How did GE calculate the amount it saved from convergence? It should not be based simply on choosing firms with lower billing rates, because that change might be accompanied by increases in hours billed.

The churlish side of me also has to scratch at the fact that in 2008 GE still does not have “final figures” for the savings through two years before, in 2006. Perhaps that is because analysts have to wait for matters to close in order to calculate the savings?

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