Peter Carter

Peter Carter has a prediction about the future of law firms—and it's bold.

According to Carter, the executive vice president and chief legal officer at Atlanta-based Delta Air Lines, in 10 years, the firms that have figured out project-based billing are going to be the leaders. And those that are still sending invoices for billable hours will be left behind. “Accounting firms have figured out how to do this, consulting firms have figured out how to do this, investment bankers have figured out how to do this,” he says. “And so in my mind, I ask, 'Why can't lawyers?'”

The answer Carter gets, he says, is that litigation is uncertain and transactions become complex, and therefore, realistic cost estimates become difficult, if not impossible, to create.

But Carter isn't buying it. The key, he says, is in using technology to accurately price projects in light of cost structure. He cites the Big Four accounting firms, which invest significant amounts of money to develop their technology tools. “When those Big Four come into the legal profession, watch out,” he says. “That will be a bigger threat than people are willing to admit.”

Law firms should get with the program on project-based billing, Carter says, as it has proven effective by aligning the incentives of the client with outside counsel. “If I'm going to pay a law firm $5 million for a case, they're going to want to win it as efficiently as they can, so it's going to align our interests 100 percent, and I like that,” he says. “It is absurd that the longer a lawsuit goes on, the more successful a practice group is. There is something wrong with that. It doesn't work from a client perspective.”

None of the 50 or so firms that make up Delta's preferred panel, which includes Alston & Bird, King & Spalding and Troutman Sanders, have pitched Carter a project-based pricing option yet, though he says he maintains hope that one will soon. “It's going to be liberating,” he says.

In the meantime, Carter says he will continue to value legal-services providers who are efficient, willing to think about alternative fee arrangements and continuously improving their service and technology, all of which he describes as critical factors in selecting outside counsel.

Another important consideration, he says, is a cultural alignment between firm and client. The firms on the preferred panel, he says, “really are Delta incarnate. They're representing us, so we hope they can exhibit the Delta culture in a way that we are proud of and that reflects our commitment to the community, to diversity, to safety, to integrity and all things that are part of our rules of the road.”

For example, Delta's legal department partners with Troutman to provide pro bono legal services to immigrant victims of human trafficking, domestic violence, sexual assault and other crimes.

And the department has similar arrangements with other outside firms. “We take our role in the community pretty seriously,” Carter says, “and we appreciate when law firms are doing their part as well.”