Microsoft Corp is planning to get rid of the billable hour. Over the next two years, it will shift most of its work to an alternative fee structure, according to deputy general counsel David Howard. The move is part of the company's strategic partner programme which it introduced last month for its external law firms. In a LinkedIn post, he said the company would rely much more heavily on alternative fee arrangements with the aspiration to move 90 per cent of work to AFAs within two years.
Stronger alignment
'We believe that alternative fees encourage a stronger alignment between Microsoft and its firms on the scope and goals of an engagement. In conjunction with this, we will have some competition for our retainer work and most expensive matters. We won’t necessarily always give our work to the lowest bidder, but through this combination of AFAs and competition we’ll help ensure that we are paying a fair price for our work,' he said.
Less efficiently
He added that the company had learned that 'simply comparing the billing rates of different firms doesn’t tell us very much. Firms which work less efficiently usually cost us more, even if their billing rates are lower. Competing on the basis of a fixed fee or similar alternative fee permits a true apples-to-apples comparison.'
Firms appointed
Firms on the list for Microsoft now are: Arent Fox; Covington & Burling; Davis Wright Tremaine; Fish & Richardson; Greenberg Traurig; K&L Gates; Latham & Watkins; Merchant & Gould; Orrick, Herrington & Sutcliffe; Paul, Weiss, Rifkind, Wharton & Garrison; Perkins Coie and Sidley Austin.
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