If imitation is the sincerest form of flattery, Tyco’s streamlining should have DuPont smiling
The news that Tyco is revamping its legal department and naming just one law firm for each practice area reveals a serious attempt by the manufacturing conglomerate to out-DuPont the DuPont Legal Model.
When Tyco began to emerge from crippling debts and a very public accounting scandal in 2001, it was up to new general counsel William Lytton to build a world-class legal model as part of the company’s attempts to revive its reputation.
“They want to create a new model of how a company works with their outside counsel,” says Laurel Harbour, Tyco’s new relationship partner at Shook Hardy & Bacon, the one firm chosen from a list of 300 to conduct all of Tyco’s product liability litigation. It is a new model, but one that owes a debt to DuPont.
Lytton was recruited from International Paper, where he had put together his own legal model based on strategic partnering arrangements with its law firms. It is a similar model to DuPont’s, which was launched 12 years ago, picking out a single law firm for each jurisdiction.
It is a model that leading US companies such as Pfizer and Wal-Mart have been keen to re-create and that UK companies such as Centrica and Orange have also adopted.
Lytton immediately began surrounding himself with senior lawyers who were able to put his partnering initiatives in place. Tim Flanigan was recruited from the White House to deal with corporate law, while former McGuire Woods partner Gardner Courson took up the litigation reins.
Courson advised Lytton at International Paper and his firm McGuire Woods was a primary DuPont adviser. Another link with DuPont was the appointment of
Jim Michalowicz from the DuPont legal team as litigation programme manager in January 2004.
Despite the similarities, Courson is keen to point out that there are key differences between Tyco’s model and that of DuPont. “The biggest distinction is that we are more focused on the practice of law as opposed to the geography,” he says.
Corporate counsel at DuPont and manager of the law firm programme Julie Mazza defends the DuPont model, based on one firm for each jurisdiction. “It’s constantly evolving. We are now better able to bring together lawyers from different firms in the network to assist us depending on the issue involved in the particular case. But we weren’t comfortable doing that initially,” says Mazza.
“We are looking for opportunities for the firms to develop new business through other companies and they help us as a company to develop customers. We benchmark with other legal departments, including Tyco, for example. And we will also recommend firms,” adds Mazza.
And in a genuine strategic partnering relationship, the firms can have an influence on the way an in-house legal team works. DuPont’s partner in the UK is Eversheds, which has assisted some of its other clients with their own partnering programmes.
Centrica Europe’s general counsel, Adrian Morris, says: “We have been able to work with Eversheds and adopt and adapt similar aspects to [the DuPont] model, and not just to Eversheds but to our relationships with other City firms that we work with.”
The partnering relationships at Tyco and DuPont involve various alternative fee arrangements. Shook Hardy & Bacon, for example, has a fixed fee that gets topped up with performance bonuses.
While some general counsels may choose to play one panel firm off against another, Morris claims that the certainty of a partnering relationship means that he spends a great deal less time managing and administering law firm relationships. “It’s not a tactical argument every single time a law firm does some work,” he says.
For the law firm, the benefits appear obvious. Paul Smith, Eversheds’ relationship partner for DuPont, says: “If you have a number of partnering relationships, you have some certainty when you start trading in the year with the order book.
Tyco has trimmed its IP advisers from 50 to three, led by Chicago’s Bartlit Beck Herman Palenchar & Scott. White & Caseand Foley & Lardner are the company’s key corporate advisers. In the US, employment, commercial litigation and asbestos claims will soon have a dedicated law firm. Europe (see below), Asia and Latin America will follow.
|Tyco’s Euro counsel|
|Tyco has recruited Trevor Faure from computer manufacturer Dell to be its new European general counsel.
Faure, legal director for Dell Europe, Middle East and Africa, is set to join Tyco in September.
Litigation head Gardner Courson was in London recently to discuss with his in-house team how best to apply Tyco’s legal model in Europe. Faure will now have an essential role to play in studying the company’s relationships with its law firms. These include Eversheds in the UK and Freshfields Bruckhaus Deringer in mainland Europe.