Microsoft Shifts From Paying Outside Lawyers by the Hour

Companies have long chafed at law firms’ practice of billing by the hour.

Now, a huge corporation, Microsoft, is taking steps to move away from the traditional billing arrangement.

David Howard, Microsoft’s deputy general counsel, said that under a program begun last month, the software giant planned to rely much more heavily on alternative fee arrangements.

Microsoft is aiming to move 90 percent of the company’s legal work to such arrangements within two years, he said in a phone interview this week.

The company’s legal department has been examining its relationships with law firms over the past year, said Mr. Howard, who oversees litigation for Microsoft, an area in which expenditures are several hundred million dollars a year.

The company’s review, he said, found that it “would benefit from moving further away from a transactional model to one that encouraged deeper engagement between our lawyers and key trusted advisers.”

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