When you are the keeper of the world's credit reports, you might expect a lawsuit every now and then, and Equifax is well prepared.
"A lot of the cases are really minor issues, but they involve hundreds of cases, so it really makes sense to find an alternative way to handle these cases with a cost that is predictable," says Robert W. Kamerschen, U.S. chief counsel, senior vice president, governmental relations and chief compliance officer. "Overall, we've decreased our spending on outside counsel by approximately 20 percent."
For the vast majority of its litigation, Atlanta-based Equifax uses King & Spalding on a flat-fee basis to handle an entire portfolio of litigation. All costs associated with litigation that fall under this arrangement are covered under the flat fee, with the exception of settlement dollars and travel expenses.
Among the values King & Spalding brought to Equifax are "a reputation in class action suits and a strong ability to manage a very large number of case loads," Kamerschen says. "They can handle large, multi-jurisdictional case loads."
Barry Goheen, a partner with King & Spalding, oversees Equifax's litigation business, an arrangement now going into its seventh year. "We handle the block of litigation for Equifax, which on any given year is between 450 to 500 cases. The arrangement has turned into a very strong partnership, and it's a win-win on both sides," Goheen says.
Goheen supports the alternative fee arrangement. "I find our arrangement very innovative and cutting edge in terms of managing a large number of cases, and I think other companies can learn by seeing how Equifax has bundled, managed and marketed its litigation work. There are advantages for the company but also the law firm as well," he says.
Equifax also hires other firms for litigation matters from a preselected list. For any firm, Equifax generally expects to use some sort of alternative fee arrangement, rather than straight billable hours.
Equifax also has flat-fee arrangements for other areas of legal work including employment and intellectual property, as well as other creative ways to hire and pay outside counsel, including a risk/reward type of fee arrangement. While that arrangement varies according to the matter, the principle is that a firm agrees to a set rate and is rewarded with a success fee.
"We like alternative fee structures because it's predictable. No surprises in the cost. Just get the job done," Kamerschen says.
Kamerschen says Equifax's law firms have no problems with the creative invoicing. "The firms embrace it," he says. "They appreciate the same predictability. We have deep relationships with them."
Other needs, other firms
In addition to King & Spalding, Equifax uses Kilpatrick Townsend & Stockton for M&A work, intellectual property and Federal Trade Commission cases; Alston & Bird for large litigation issues; and the Washington office of Arnall Golden Gregory for privacy law.
Peter Kontio, a partner and co-chair of Alston & Bird's litigation practice, has successfully defended Equifax in several antitrust suits in California, Ohio, Maryland, Minnesota and Pennsylvania. He endorses the creative approach to cost containment.