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There has been significant growth in 2019 in non-law firm competitors according to the 2020 Report on the State of the Legal Market published on Monday by Thomson Reuters, Georgetown Law's Center on Ethics and the Legal Profession, and Peer Monitor.

The report indicates that the last recession where legal departments began to source more work internally led to the rise in alternative legal service providers.

Legal operations functions have also taken off in the last five years which has led to legal departments finding alternatives to law firms and many legal departments are beginning to move away from the billable hour.

"The dramatic change in the role of clients, the significant growth in non-law firm competitors, and the innovative responses by law firms themselves—are now beginning to coalesce in what can realistically be called a new emerging model for legal services," the report says.

Does your legal department plan on using more alternative legal service providers in 2020? Let me know by sending me an email at [email protected].

What's Happening

 

Top Concerns For The Year

General counsel are worried about a number of things in 2020, according to a report published this week by Akin Gump Strauss Hauer & Feld. Kerry Berchem, a partner at Akin Gump, spoke with Corporate Counsel on the concerns of in-house leaders and what sparked those concerns this year.

▶ Human Resources Issues. GCs are concerned over board diversity, pay equity and the #MeToo movement. Berchem said that sometimes GCs are put in charge of human resources, and the GC is the best person to implement these initiatives and have a frank conversation with the board of directors about these issues.

▶ Election And War. Berchem said if the list were written today, it would include the fear of a war with Iran. Berchem said it all depends on the size of scope of a company. A defense contractor's GC, for example, will be paying attention to how likely it is that a war is declared to prepare for the business. She said as far as an election goes, candidates like Bernie Sanders and Elizabeth Warren, have taken a stand on Wall Street and GCs will want to know what regulations they will be subject to in the future.

▶ Corporate Reputation. General counsel must be constantly monitoring what is on the internet about the company they work for. Not everything needs to be reported to the board, but there should be an assessment of the reputational risk a company faces with information that is on the internet.

 

High Defense Fees

Cognizant has paid $15 million in legal fees for its former chief legal officer who is facing federal bribery charges. According to a lawsuit filed by the former CLO Steven Schwartz, the company stopped paying advancements to the Bohrer law firm just before Thanksgiving. The company had previously paid Bohrer $8.36 million in fees to represent Schwartz.

In the suit in the Delaware Court of Chancery, Schwartz claims the company is required to continue to pay Bohrer advance fees under an indemnification agreement. Cognizant argues the fees are "abusive" and unreasonable. Cognizant is continuing to pay the other firms that represent Schwartz: Paul, Weiss, Rifkind, Wharton & Garrison and Gibbons.

Schwartz and the Cognizant's former president, Gordon Coburn, are facing federal charges over allegedly authorizing a building contractor to pay more than $3.6 million in bribes to a government official in India. In February 2019, the company agreed to pay a $25 million civil penalty to settle allegations that it violated the Foreign Corrupt Practices Act.

What I've Been Reading

The general counsel of Apple, Kate Adams, earned $25.2 million in total compensation in 2019, according to a Bloomberg report. The lion's share of her compensation came in the form of restricted stock awards. Part of the compensation included relocation assistance to move from California to New York. In 2018, her compensation totaled $26.7 million.

Historical relationships are more important to a majority of in-house counsel in Canada than expertise, according to a report in Canadian Lawyer Magazine. Sixty-six percent of respondents to the magazine's 2019 Corporate Counsel survey indicated that loyalty to existing firms is a top priority. Only 52% of the attorneys indicated that practice area expertise is the top factor when selecting outside counsel and 59% indicated they are looking for specific attorneys.

Airbnb associate general counsel Derek Smith said in a Profile Magazine story that starting an all-male acapella group at Oxford University gave him an entrepreneurial spirit. He said that experience made him more willing to go in-house than follow the traditional route of working at a law firm. "In an in-house role, your purpose is to help grow and improve the business," Smith said. He explained when he joined the company in 2016 there were only 25 people in the Airbnb legal department. Now there are 150 people.

Don't Miss

Monday, Jan. 13, 2020 to Tuesday, Jan. 14, 2020 – The National Retail Federation will be hosting its General Counsel Forum Winter Meeting at the headquarters of Tapestry Inc. in New York.

Monday, Jan. 27, 2020 to Tuesday, Jan. 28, 2020 – American Conference will be hosting a two-day forum on False Claims and Qui Tam Enforcement at the Park Lane Hotel in New York. Speakers will include Savaria B. Harris, senior counsel at Johnson & Johnson; Patrick McCarthy, managing general counsel at Fluor Government Group; and Maryana Zubok, senior corporate counsel at Pfizer Inc.

Tuesday, Feb. 4, 2020 to Thursday, Feb. 6, 2020 – Law.com will be hosting the annual Legal Week conference at the New York Hilton Midtown. The featured keynote speakers this year include former deputy attorney general Rod Rosenstein and Bettina Warburg, co-founder and managing partner of Warburg Serres Investments.

On The Move

 

✦ Ventas ✦ Carey Shea Roberts has been hired as executive vice president, general counsel and ethics and compliance officer of the real estate investment company. She will begin her role in the first quarter of this year.

✦ ACOG ✦ Skye Perryman has been named the chief legal officer and general counsel of the American College of Obstetricians and Gynecologists. She has been the interim legal leader of the organization since September when Sara Kline left the role. Perryman first joined ACOG in April 2018 as deputy general counsel.

✦ U.S. State Department ✦ Curtis J. Mahoney has been tapped to become the top lawyer at the U.S. State Department. Mahoney has most recently served as a top U.S. trade official. If confirmed, he would replace Jennifer Newstead, who now serves as general counsel to Facebook.