Global telecoms giant Motorola has slashed its legal spend by $200m (£112m) and halved the number of law firms it uses.
During the past three years the company has been ruthless with external counsel by driving down fees and demanding discounts and flat rate fee proposals and axing firms that would not oblige.
The Chicago-based company has halved its total legal spend since 2000 from almost $400m (£224.1m) to just under $200m; it has also halved the amount it spends on external counsel to $110m (£61.6m). It also cut its in-house legal department from 400 staff to 200.
Firms such as Olswang and Steptoe & Johnson were hit by the cut, although it is understood that Steptoe retains involvement with ongoing, or ‘legacy’, litigation. The loss will be a blow for Steptoe because Motorola was a flagship client. Steptoe was unavailable for comment.
Ashurst and CMS Cam-eron McKenna are known to have retained their relationships with Motorola in the UK, while Baker & McKenzie, Freshfields Bruckhaus Der-inger and White & Case are preferred in Europe.
The overhaul of the legal department has been part of a company-wide restructure, which has resulted in Motorola posting a record third-quarter profit for 2005.
In an exclusive interview with The Lawyer, Motorola global general counsel Peter Lawson said: “Like any business, we’ve been under a lot of pressure from the management to reduce our costs.
“Motorola went through some difficult times about five years ago. We’ve taken a very sharp pencil to our patent-generation costs and developed a number of low-cost sources for our legal work.”
The company has outsourced its in-house patent-generating work to small Indian firms and is increasingly hiring regional firms such as Hammonds and Osborne Clarke. The company produces around 1,000 new patents a year.
UK head of legal Palwinder Hare was promoted to head the Europe, Middle East and Africa department last week. He said the company did not consider City firms to provide “value for money”. Hare claimed: “We don’t go straight for the big City firms because we don’t feel their fees are justified.”