Spun off thoughts based on the large litigation group at Ford Motor

Corp. Counsel, March 2010 at 77-79, makes several points about the litigation group at Ford Motor.

(1) The group employs the most lawyers in the department. That should sadden everyone except those in the litigation group, because no company sees litigation as a core competency (except patent trolls) and litigation rarely adds value for society.

(2) For years Ford has had four teams in its litigation group – product litigation, general litigation, regulatory, and in-house discovery – and its lawyers specialized on one of the four teams. A company with the onslaught of litigation like Ford can and should focus lawyers on portions of that stream.

(3) Ford “has lowered its litigation spending since 2005 by 27 percent.” That drop excludes IP litigation, which is handled outside of the litigation group. This impressive feat, however, gives me pause. Does the drop reflect a drop in business (See my post of March 24, 2010: layoffs for business shrinkage or for terminations.). Was 2005 a high water mark (See my post of Feb. 7, 2006: regression to the mean.)? Does the litigation spending include settlements and judgments paid? Has the mix of lawsuits during the period changed materially, such as fewer class actions? In short, to what degree is the decline attributable to better management as compared to systemic shifts?

(4) “About 80 percent of its litigation caseload – which constitutes 70 percent of its outside counsel spending – is paid on a flat fee basis.” (See my post of July 7, 2009: estimates of 60 percent spent on litigation by US legal departments may be too high.). That ratio of flat fees impresses me. With Ford’s downpour of litigation over many years, such billing arrangements ought to be understood and reliable more so than for legal departments with a drop or two falling here and there.

(5) “When Ford doesn’t pay flat fees, nearly 95 percent of the partners trying its cases work for hourly rates of less than $300.” What an amazing low figure, which should make other general counsel green with (no green) envy (See my post of March 9, 2009: effective billing rates with 9 references.).

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