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Three experiences from UTC about alternative billing

Having reduced the number of outside firms it uses from approximately 750 in 1999 to 300 in early 2005, and having chosen approximately 80 of the survivors as “preferred counsel,” who currently receive close to 75 percent of United Technologies’ spend, the law department has learned some lessons (From Jan. 2005 materials of ACC provided at a conference organized by the ABA Section of Business Law and ACC, Nov.18, 2005 at 11-12).

Volume discounts “shifted our base costs down a solid 15-25% in the first few years,” but renewals of those agreements dragged the law department back up the cost curve. The department started to shift to off-the-clock alternatives, and by early 2005 “around one-third of the department’s outside law firms are completely off the clock.” Some of them work against “targeted band fee structures.” UTC has also worked with its matter management and e-billing system vendors to have those programs accommodate alternative billing arrangements.