Posted by: johnocunningham | February 12, 2014

Want More Legal Work? Help Your GC Client To Be A Profit Center

When I was a General Counsel, I was often asked by law firms prospecting for business how they could get a chance to serve my company. My reply was always: “Show me how to make a profit, and I will hire you.”

Some lawyers didn’t get it, but others rose to the challenge, and helped me to recover literally millions of dollars for my corporate employer and client through savvy use of:

  •  Audits of leases with landlords to see if they were properly charging us for common area maintenance, taxes, and other charges under our leases (surprise, surprise, they often overcharged);
  • Audits of contracts with vendors to see if we were being paid for all applicable volume incentives, co-op advertising, and other earned rebates (again, many times these payments were not being made and we could recover them with mere modest and friendly intervention by our lawyers);
  • Actions against intellectual property infringers who were obligated to pay for significant statutory damages;
  • Actions against insurers who charged more than they were supposed to under certain complex policies, such as so-called “retro-loss” policies;
  • Obtaining rights to designate competent counsel under insurance policies, thereby allowing us to hire aggressive and smart trial lawyers who brought our total settlements and awards way down, year over year;
  • Actions against real estate assessors and other taxing authorities for overcharges related to inflated property, inventory or other valuations; and
  • Class actions against the government for unconstitutional tax assessments (under applicable state or federal constitutions).

Now, I see that this kind of profit-center action by legal departments is being called a “trend” in trade literature, and some lawyers are writing very good articles about how to turn legal departments into profit centers instead of cost centers. See, for example, a recent Corporate Counsel piece by John Vishneski of Reed Smith.

I know from experience that the GC wants, needs and loves to show his or her CEO that the legal department can be conceptualized as a “profit center” because that helps to keep the funds flowing into the department after every annual showdown with the CFO on what needs cutting.

Take it from me, if you want to get more corporate legal business, help your GC client to turn his or her department from a much-hated cost center to a valued profit center.

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