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Pfizer is notorious in the legal profession for chiseling down law firm fees, greedily exploiting the buyer's market in legal services, and throttling down the law firms it uses to the 15 who will take the least money. What has it gotten them?
These 15 neutered law firms accepted annual fixed fees for all their work -- all expenses included. The firms provided free "secondee" lawyers to the company, were dominated by a Pfizer steering committee, were forced to do free legal work, were graded on a "balanced score card" and suffered other humiliations. And here is what these "legal alliance" law firms have brought Pfizer: Pfizer weighs legal options as PA Supreme Court revives Redux design-defect suitUS high court leaves intact $142 million verdict against Pfizer | ReutersJury Awards Former Pfizer Scientist $1.37 MillionPfizer Settles Kidney Transplant Drug Case for $491 MillionPfizer Loses Appeal of $58 Million Prempro Jury AwardPfizer Loses $38 Million Trade Secret Jury Verdict in CaliforniaOf course the law firms would never admit that they gave the low-paying Pfizer work to untrained associates or took other shortcuts. But when a company that relentlessly promoted "The Pfizer Model" for chiseling down legal fees gets spectacularly bad legal results -- you have to consider the circumstantial evidence. It's like when you wake up and see snow on the ground in the morning. You have circumstantial evidence that it snowed. |
From CorpCounsel.com:
PLA chief counsel Ellen Rosenthal has been terminated.
The shake-up in the Pfizer Inc. law department continues under new general counsel Douglas Lankler, with this week's removal of Ellen Rosenthal. For four years, she served as chief counsel for the Pfizer Legal Alliance (PLA), a select group of 15 law firms that represent the company. Lankler purportedly sent out an email Monday to the member law firms. It said Rosenthal “will discontinue her PLA chief counsel responsibilities, effective immediately.” In an interview Tuesday with CorpCounsel.com, Rosenthal confirmed to that she was leaving Pfizer and the alliance, but referred questions to Pfizer media relations. 
GC Amy Shulman was ousted last year
The alliance, a collaborative partnership between Pfizer and the law firms, was formed five years ago by then–GC Amy Schulman, who was suddenly ousted in December. Schulman brought Rosenthal to Pfizer and handpicked her to lead the PLA. The alliance was hailed as a model in cost-cutting and law firm management for in-house counsel. Besides handling cases, the PLA's work included a large number of pro bono and public interest efforts in which the outside firms were pushed to participate along with Pfizer. Now, the question is: What will happen to the PLA and those efforts? At least one source has said Lankler told his legal team members that they could hire firms outside the alliance if they want. In his letter, a copy of which was obtained by CorpCounsel.com, Lankler praised the alliance but said his team at Pfizer was “assessing,” “streamlining” and “reviewing where the alliance is and how it should continue to evolve.” He wrote that the changes “will entail reducing some of the associated efforts and programs that are connected to the PLA, such as the PLA Roundtable, 30-minute practice area calls and the PLA annual report.” |
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john mario Reply
Posted Mar 02, 2014 at 10:48:21
wow that’s really great. that’s an awesome article. thanks fro sharing. so much interesting. Orange County Bankruptcy Lawyer
Ron Friedmann Reply
Posted Mar 02, 2014 at 10:58:18
What data supports the connection you are drawing between amount paid to law firms and large verdicts. Many pharma and device companies have paid large judgments. Normalizing Pfizer payments to the industry at large and Pfizer’s specific product mix, are the amounts paid out higher than competitors? And, if so, what data support the connection between PLA and the legal outcomes you cite?
In other words, how do we distinguish here between correlation and causation?
Ann Gibson Reply
Posted Mar 02, 2014 at 11:43:55
Larry,
Is the causal relationship you suggest above (between Pfizer’s law firm panel and the seven Pfizer legal case outcomes you linked to) something you have concluded is actually valid?
Have you confirmed with anyone at Pfizer that the law firm panel and the quality of those firms’ lawyering was primarily responsible for these seven outcomes?
Have you confirmed that only the law firms on Pfizer’s P3 panel were responsible for litigating the matters you linked to above?
Do you know and did you consider the potential exposures to Pfizer in these matters and whether Pfizer considers those outcomes to have been negative outcomes?
Finally, do you know of and did you consider the outcomes of any other Pfizer legal matters handled by the law firm alliance members since the panel’s inception in 2005?
As always, inquiring minds would like to know.
Thank you,
Ann
Larry Bodine Reply
Posted Mar 02, 2014 at 14:32:40
I only need to read the headline to see that Pfizer’s legal team has been losing major litigation for several years running. That covers the time period that the Pfizer Legal Alliance has been in effect. They work with only 15 law firms so who else would be causing the huge verdicts against Pfizer?
Larry Bodine Reply
Posted Mar 02, 2014 at 14:34:10
Pfizer’s legal team has been losing major cases for at least the last three years, as the headlines show. The company only works with 15 law firms, so who else would be losing these big cases?
Seve Lauer Reply
Posted Mar 03, 2014 at 13:41:51
One possible reason for litigation losses other than bad lawyering is bad facts (or, for a pharmaceutical company, bad drugs or unanticipated side effects, or bad marketing of good drugs). Quite a few years ago, I managed the appeal from a significant adverse jury verdict on a sale of real estate. We believed that the facts and law were on our side despite the jury’s decision. During the appellate process, which took five years and included a loss at the intermediate level, the in-house lawyers continued to explain to our internal clients that they (and the lawyers involved in the transaction) had done nothing wrong to warrant the verdict. Ultimately and after five years and many dollars, the company and the lawyers were vindicated when the state supreme court issued a decision completely reversing the verdict and granting judgment, obviating the possibility of a retrial before the same trial judge). We never thought of blaming the trial lawyers for that jury decision (or the decisions of the judge during the trial).
Larry Bodine Reply
Posted Mar 03, 2014 at 14:57:02
You make a good point about bad facts vs. bad lawyering. I hope you were not on a fixed budget set by a corporation when you litigated the real estate case you mention.
Assuming that the facts were bad in the verdicts against Pfizer, you have to wonder why Pfizer would litigate them. One possibility is that that Pfizer told its 15 law firms to fight the consumer claims in open court, knowing they would lose many of them, and then bargained the firms down on what they would be paid. An approach like this would produce the result Pfizer got — short-term saving on legal fees in exchange for damage awards in the millions for the stockholders.
Pfizer does seem to litigate bad cases. Taking Prepro for example, Pfizer and its units have lost 11 of 21 cases over the menopause drugs decided by juries since trials began in 2006, according to data compiled by Bloomberg.
Henry Williams Reply
Posted Mar 04, 2014 at 00:15:15
Also agree with the other commentators – thois article seems fundamentally flawed. It may well be that in those awards, Pfizer just had a bad vase. Or maybe they have a particular commercial strategy to avoid settling confidentially. It seems a huge leap of faith, and wholly unsubstantiated, to suggest that the results of the cases are because of the law firms they use. The quote at the end about evolving the alliance doesn’t suggest to me it has underperformed, more a natural progression. More and more general counsel are using this type of model, and to equate being evaluated using a balanced scorecard with “humiliation” is ridiculous – whether or not you like that model, it’s a pretty tried and tested method of performance management that has been used extensively all over the corporate world for decades. This article reads like a very bad case of traditional law firm thinking meeting cold. hard corporate reality, and throwing toys out of the crib as a result.
Larry Bodine Reply
Posted Mar 04, 2014 at 07:32:19
I think you meant that Pfizer just had a bad “case.” If so, they had many bad cases, lost for spectacular results.
If the Pfizer panel method was so tried and true, why did it fail in such a dramatic fashion, with the sacking of the promoters of leaders of the program? Isn’t it just stupid for a company to use its market power to bully its law firms into taking low rates, and then to have them litigate mega-million liability cases? That seems like a formula for losing huge cases, which is what happened.
Dr Maue Reply
Posted Mar 04, 2014 at 23:14:26
This was absolutely predictable as I pointed out in a commentary I wrote whenever this PLA was formed. This fixed fees and reduced rates and comments like,“Our firms need to have some skin in the game”, was a ridiculous statement. These law firms are retained to provide the best legal defense possible without being handcuffed with trying to put together a fixed fee regarding very complicated litigation. As I stated fixed fees maybe useful in routine maters such as some real estate transactions and workers compensation cases but not the type of cases Pfizer is involved with on a globally. Law firms like Pfizer are business and both are in business to make money plain and simple and to think otherwise is a fact. In order to keep from losing money law firms are forced to put lower level lawyers on these cases thereby minimizing the use of senior level lawyers. I told my staff that this model would probably collapse in 5 years and now I look like a true psychic but I really did not know it would collapse as suddenly as is has and leave in its wake several causalties but that’s business. To really solve the issue of controlling legal fees and expenses is to simply put together a mutually agreed upon comprehensive set of billing guidelines and then retain the services of a professional legal cost management company to objectively monitor all the fees and documented expenses. And I do not mean a E-Billing company that simply has an electronic software system that can catch wrong billing rates and copy costs . I mean a real legal auditing company that has experienced lawyers and forensic accountants that can perform a line item review of all billing entries and reconcile all receipted expenses. These professionals have to be assisted with a powerful custom software system that is programmed for each specific clients need not a one size fits all system I enjoyed your article and new only time would take cars of this ill thought out cost control program that was doomed from the beginning. Respectfully submitted , Dr. Harry J. Maue, Chairmsn & CEO of StuartMaue, Ltd. Saint Louis, Missouri
Andrew Boer Reply
Posted Mar 18, 2014 at 18:02:31
I practice in a Melbourne AU law firm that works exclusively on agreed pricing. The main issue that I see emerging in the Pfizer model is that Pfizer was driving ‘cost’, not ‘value’. This is one of the reasons that we don’t participate in competitive tendering – it is simply a race to the bottom price and is driven by cost, not value.
When cost is the driver, client and lawyer have opposing interests, so quality and sustainability suffer (sometimes both). When value is the driver, client and lawyer interests are aligned in a more ‘win/win’ arrangement. We believe that lawyers should take some risk and have ‘skin in the game’, but pricing arrangements should reflect that.
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