In the April 12, 2000 article "Online Venture Will Invite Law Firms to Bid for Work"], Richard B. Schmitt wrote for The Wall Street Journal:
In the early 1990s, John B. Henry II was a pioneer in brokering corporate "pollution credits." Now, he's moving on to corporate lawyers. The entrepreneur wants to use the Internet to overhaul how corporations shop for legal services. This spring, he plans to launch what amounts to an eBay where would-be clients can package legal work and solicit bids from law firms in an online auction. The idea is for the firms to bid against each other and send the cost down.
The law business is "fragmented and inefficient," says Mr. Henry, himself a fallen-away corporate attorney. Clients sometimes hold "beauty contests" among a handful of law firms they already know. But scores of other law firms that may be qualified and willing to compete on price never get a foot in the door. "We're trying to create a competitive market," Mr. Henry says. He has already shopped the idea for his new venture, called eLawForum Corp. (http://www.eLawForum.com), with several dozen of the nation's largest companies and lined up impressive endorsements. In exchange for stock options, an "advisory panel" of 20 ex-corporate general counsels are helping open boardroom doors.
Mr. Henry, chief executive of the venture, has hired an ex-senior counsel for Mobil Corporation, Kay Ellen Consolver, as his chief operating officer. He has raised $2 million from investors such as Thomas Stemberg, the Staples Inc. chief executive (and a classmate at Harvard), and C. Boyden Gray, President George Herbert Walker Bush's chief White House counsel and now a partner with the Washington law firm Wilmer, Cutler & Pickering.
Lately, eLawForum has been trying to drum up future bidders in meetings with law firms and at various lawyer gatherings. Already, a few client-companies are participating in trial runs. Among the participants is Liberty Mutual Life Insurance Co., of Boston, which recently auctioned off some personal-injury defense work. The company now plans to put some employment-law work up for bid.
"I'm extraordinarily enthusiastic," says Christopher Mansfield, Liberty Mutual's general counsel. Online shopping for a corporate lawyer is "fast becoming a reality," he adds.
Indeed, a number of competing services are getting ready to go online. In a few weeks, Altman Weil Inc., a Newton Square, Pa., legal consulting firm, plans to launch its own lawyer-brokering venture, iBidLaw.com. And ELF Technologies Inc., a Seattle, Wash., supplier of legal-auditing and case-management tools over the Web, is putting the finishing touches on a registry of thousands of lawyers that it says are eager to bid on corporate assignments.
Legal services for large corporations are a good candidate for the Web's leveling effect. It's a market that is huge, growing and little affected by price pressure, says William Shank, the former top in-house lawyer at retailer Walgreen Co. and one of Mr. Henry's advisers. The attitude of many general counsels, Mr. Shank adds, is "if you're satisfied with a lawyer who has handled your matters for a long time, you are hesitant to change unless something has gone wrong."
Mr. Henry, 51, concedes eLawForum, at least in the early stages, probably wouldn't be the place to go for a lawyer in the event of a hostile takeover, criminal indictment or other high-stakes matter. Some traditionalists go further and argue that corporate legal services aren't fungible commodities and shouldn't be auctioned off like used cameras and industrial equipment. It takes more than a few mouse clicks to discern particular qualities in a lawyer, such as judgment or trustworthiness, skeptics maintain.
Duane Wall, managing partner of New York law firm White & Case, says an online service might be a useful way to identify a short list of attorneys, but he doubts clients will "make their final selection over the Internet."
Mr. Henry's view is that many mundane corporate legal tasks are already commodities. Inside law firms, assignments such as insurance claims, routine product-liability cases, and leases and other real-estate matters are in fact often called "commodity" work. And if big auto makers are turning to the Net to save on auto parts, why wouldn't they do so for depositions?
The opportunity is huge. Corporations spend about $100 billion a year on outside law firms, Mr. Henry says, and the figure is rising as the economy keeps rolling. Much of the spending is for everyday legal work. "Most corporate law firms have that capability," says Christoph Hoffmann, former general counsel at Raytheon Co., and another eLawForum adviser. "They can't really screw it up."
Of course, chemistry will always be an important part of attorneys' dealings with clients, Mr. Henry says -- but only after the market has determined a fair rate. He figures many law firms will end up embracing the online-auction concept as an inexpensive way to break into new markets. An intense, cerebral man, Mr. Henry lasted less than a year at the Wall Street law firm Cadwalader, Wickersham & Taft before quitting. He has long been a student of complex markets. Before getting his law degree, he wrote a book on the history of U.S. relations with multinational oil producers. In the 1980s, he launched a company that made bioengineered pesticides, riling environmentalists concerned about the release of genetically altered material. In the 1990s, Mr. Henry formed a trading company, Clean Air Capital Markets, that cashed in on a 1990 federal law allowing utilities to meet clean-air standards by purchasing "pollution credits" from more environment-friendly rivals. "We created a market where people said you couldn't," Mr. Henry says. The company, now defunct, was profitable for a number of years.
ELawForum is working with a "request for proposal" system, in which clients would post their legal needs, and law firms, including incumbents, would bid against each other to win the job. The request would be floated among a group of law firms chosen by the client or prescreened by a team of ex-corporate counsels led by Patrick Head, once top in-house lawyer at FMC Corp., a chemicals and machinery supplier.
In the demo Mr. Henry has been showing possible clients, a hypothetical Illinois manufacturing company wants to sue a Texas distributor to recover $28 million in debt. The relevant details about the assignment are posted; the invited bidders include the company's long-time outside counsel. ELawForum.com charges a fee of 2% of the value of the legal work to be done, collectible from the company only if client and firm cement a deal.
During the process, the law firms may ask questions, in an attempt to clear up conflicts of interest, for example. They also must say which attorneys would do the work and what their expertise is and answer questions about everything from diversity policies to photocopying charges to whether associates stay in first-class hotels.
Big law firms in New York, Chicago, and Los Angeles might hesitate to participate in auctions, for fear of driving down billing rates. On the other hand, they may not have a choice, if their clients start auctioning off substantial work.
Mr. Gray, the former White House counsel, says he figures auctions might be a good way for his firm, Wilmer Cutler, to capture new mergers-and-acquisition business, traditionally the domain of big New York firms. "It is very hard to crack the New York market," he says. "I think this would actually help us" to compete.
NOTE: The link to elawforum.com appears to either be broken or no longer active. (8/16/03)
Using eLawForum, companies can find the best legal talent, at the best price, anywhere in the world. Created specifically for you, as in-house legal counsel, eLawForum is a powerful Internet tool to help you build on and expand your relationships with outside counsel through merit-based competition.
Companies register on www.elawforum.com without cost and post RFPs describing the legal work, fee structure, expertise, bar admissions and other desired information. You then select from the law firms registered with eLawForum those you want to bid. This allows firms, who also register without charge, to compete for your business.
Once bids have been reviewed, you may go off-line to meet the attorneys bidding prior to your final selection. Saving money is a compelling reason to use eLawForum. Equally important are personal "chemistry" and the ability to choose the firm and attorneys you believe will best serve your company's interests.
As an Alliance partner, eLawForum offers ACCA members the opportunity to post an RFP without charge, attendance at an ACCA conference with our paying the registration fee; scholarships to ACCA conferences (recipients chosen by ACCA) and support for ACCA Regional meetings. For more information, please contact our Chief Operating Officer, Kay Ellen Consolver, or our Vice President-Marketing, Susan Farnsworth, at (202) 466-0520 for further details.
We are look forward to welcoming you as part of the client team eLawForum proudly serves in the U.S. and abroad.