About a year ago, the legal department at Microsoft announced it would be shifting away from the billable hour in the vast majority of its outside counsel arrangements. In describing these intentions, Corporate Vice President and Deputy General Counsel David Howard wrote about forging “a new type of relationship” with the firms handling Microsoft’s most important legal work. Much of the discussion around this shift focused on its economic ramifications and on framing this move as another step toward the long-anticipated demise of the billable hour in favor of alternative fee arrangements. A year into this effort, the Microsoft team can attest that, while the new billing model has certainly had an economic impact on the company and its outside firms, it’s had a far more profound impact on the relationships between Microsoft’s in-house personnel and outside counsel.

Today, Microsoft’s Commercial Legal Group works almost exclusively with a single outside law firm, Perkins Coie, which provides almost all the outside counsel work on a retainer arrangement with a performance bonus. While that certainly brings Perkins Coie’s economic interests into closer alignment with Microsoft’s, what’s far more meaningful is how, together, [they] have reshaped the client-firm relationship. Click here to read the full article

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