As a result, âweâll do more work with firms on a retainer basis,â he said, an approach that will âembed our firms much more deeply in our work.â
He emphasized that the move was less about saving money than it was about deepening relationships between Microsoft and the law firms that execute its legal strategy.
âWe want to create a situation that encourages our lawyers to be able to pick up the phone â without going through bureaucracy or worry about how to pay for it â and talk to the law firm about whatever is needed,â he said. âA firm usually handles a case, then you donât hear from them about legal developments in an area of concern, and we want to change that.â
The change in Microsoftâs relationship with its law firms could help spur more companies to abandon the billable hour method of charging for legal services.
Corporations have been grumbling about billable hours for nearly a decade, with complaints rising after the 2008 financial crisis prompted cuts in legal budgets.
Companies began hiring more in-house lawyers, reducing costs by handling more routine legal work themselves rather than assigning it to outside counsel.
Most corporations have remained willing to pay for seasoned lawyers to resolve high-stakes legal matters, but they have been increasingly reluctant to subsidize additional costs like training entry-level lawyers. As demand for law firm services has decreased in recent years, firms have been more willing to agree to alternative arrangements like fixed fees to handle legal matters. Corporations have pushed this approach because it gives more certainty to their annual legal expenditures.
The firms that will be part of Microsoftâs revised program are Arent Fox; Covington & Burling; Davis Wright Tremaine; Fish & Richardson; Greenberg Traurig; K & L Gates; Latham & Watkins; Merchant & Gould; Orrick; Paul, Weiss, Rifkind, Wharton & Garrison; Perkins Coie; Sidley Austin; and Simpson Thacher & Bartlett.
Mr. Howard also said Microsoft planned to work more closely with law firms on diversity, which its legal department, along with those of companies like Facebook, has increasingly emphasized as a way to encourage firms to employ a broader variety of lawyers.