A fixed fee to handle 450 labor, employment and ERISA cases over five years

A white paper entitled “eLawforum: Transforming Legal Services,” published in February 2004 at 11, describes a large-scale competitive bid. The unnamed Fortune 500 company packaged its labor, employment and ERISA litigation over a projected five-year period. The package envisioned that there would be 450 cases in these practice areas, and most of them would be future claims. The company agreed to pay the fee in 20 equal quarterly installments.

The company invited 44 law firms to propose, including 31 incumbents. Later in the monograph, the authors state that “of the 50 eLawForum competitions we studied, incumbent law firms won half the time” (See my post of March 16, 2009: rigged competitions with 6 references.). It’s always good to solicit bids from good firms that you haven’t used.

The highest fixed fee proposed was $56.3 million while the lowest was $10.5 million. A chart that accompanies this description shows the fees proposed by 14 law firms. Aside from any other benefits of fixing its costs for this block of work, the law department would certainly have a good feeling for what the market would charge to handle these services.