Microsoft wants its outside lawyers to quit billing by the hour

Microsoft is looking to build a deeper relationship with their external law firms by cutting out the hourly billing, according to a recent blog post from David Howard. The Corporate Vice President and Deputy General Counsel shared on LinkedIn that the tech giant is leaning towards alternative fee arrangements and is hoping to move 90% of their law partners to the new method within the next two years.

With the beginning of our fiscal year on July 1, we have introduced Microsoft’s Strategic Partner Program, a new type of relationship with the law firms which will be handling most of our most important legal work. While we always want to ensure that we are paying a fair price for our legal work, our primary goal with this program is to get (and give!) more value with our law firm relationships.

The Strategic Partner Program designed to create deeper relationships is an effort to encourage higher quality law firm practices instead of lower rate competition and poor quality. Microsoft intends to work with firms on a retainer basis, promote open forums with advisors, and pay fair prices that don’t interrupt the expected quality of a law firm.

The goal will also coincide with the Law Firm Diversity Program, encouraging a more diverse availability to minority representation. The following firms will be part of the Strategic Partner Program within the year:

• Arent Fox
• Covington & Burling LLP
• Davis Wright Tremaine LLP
• Fish & Richardson P.C.
• Greenberg Traurig, LLP
• K&L Gates LLP
• Latham & Watkins LLP
• Merchant & Gould P.C.
• Orrick, Herrington & Sutcliffe LLP
• Paul, Weiss, Rifkind, Wharton & Garrison LLP
• Perkins Coie LLP
• Sidley Austin LLP
• Simpson Thacher & Bartlett LLP

“Firms were not only more open to discussing work on an alternative fee basis, many are embracing it,” he assured. Howard also noted that the bidding process will drive competition with prices and keep the law firms fair on significant matters, particularly when deciding which will represent the company.