Comcast's top lawyer calls the workload shots

In a legal marketplace where lucrative corporate work is an increasingly precious commodity, Art Block holds the key to the realm.

Block is the top in-house lawyer at Comcast Corp., its general counsel, and he makes decisions on how the sprawling communications company spends its huge legal budget.

It is Block who decides in large measure whether work stays in house or is shipped to one of dozens of firms that compete fervently for Comcast's business.

He helps select the outside firms that work for Comcast, plays a central role in deciding how they should be compensated, and sets the tone for the company's relationship with outside law firms.

That relationship is rapidly changing.

Comcast, like many other corporate giants, froze its legal spending in 2009 after years of annual law-firm increases of 5 percent or more. Block says the freeze was partly in response to the recession, but also was triggered by the belief that hourly rates, particularly for first-year associates, had gotten out of hand.

Now the company increasingly wants its outside lawyers to do more to jettison the traditional hourly billing rate. It is pressing for flat fees or other alternative-billing arrangements that emphasize efficiency and expose firms to financial risk if matters drag on too long or conclude unsuccessfully.

Comcast, based in Philadelphia, has approved a 2.5 percent increase in hourly rates for 2010. But the message to law firms is unmistakable: The balance of power has shifted, and outside lawyers will have to scramble to keep the company's business.

"The objective is to get a sense that the law firm is managing its own business more efficiently for our mutual benefit so they have some skin in the game," Block said. "We are not looking to be punitive; we are looking to be more businesslike."

A decision by Comcast managers to push back against rate increases or to accelerate changes in the way law firms are compensated has ripple effects far beyond Comcast, the nation's largest cable company, with 24 million customers.

One reason is the size of Comcast's legal budget, typically between $75 million and $100 million a year but likely more than that in 2010 as the company moves to complete its acquisition of a controlling interest in NBC Universal Inc., a $30 billion transaction announced Dec. 3.

With that much money to spend, Comcast can be sure the big firms are listening, said William F. Brennan, a consultant at Altman Weil Inc., a legal-consulting firm based in Newtown Square.

"It's extremely important; they are the buyers of legal services," he said of Comcast. "Firms would be very unwise not to pay close attention to what they say."

The law firms themselves say the push for greater efficiency and alternative-billing arrangements can work for both sides, provided there is a good working relationship.

"You have to have a good strong relationship for these things to be effective, and I think they can be very effective," said Robert Heim, chairman of the litigation department at Dechert L.L.P. who represents Comcast on some matters.

The man helping to orchestrate this sea change in the way Comcast pays for legal services is an understated Philadelphia native who did his undergraduate work at the University of Pennsylvania and went to law school at the University of Michigan.

Block's first job out of law school was at Wolf, Block, Schorr & Solis-Cohen L.L.P., which dissolved in March but which was, through much of its history, one of the city's most prominent and influential firms.

He was no relation to the name partner at the firm, but his career took off there as though he had been a member of the family.

His first assignment was to work with the Wolf Block partner handling Comcast business. Comcast then had begun a flurry of acquisitions and other deals and Block, now 54, was in the middle of most of them.

By the time Block became a partner, he was responsible for all of Wolf Block's Comcast business.

Three years later, in 1988, Comcast approached Block to join its then three-person legal department. He jumped at the chance, even though he joined as the company's number-two lawyer and not as general counsel, the more typical move in those days for a partner at an outside law firm.

The company was exciting, Block said, and he wanted to be on the inside.

"I was moving to become the number-two guy without a promise or the certainty that I would become the number-one guy," he said. "People told me, 'You are crazy. Where is your ego?' "

Now the company has 75 lawyers on staff. It will have many more once it completes its transaction with NBCU, which has 250 in-house lawyers.

In keeping with the pattern set in past Comcast expansions, Block says he anticipates no major changes in the legal staffs of either company once the deal is complete.

"The approach is, we want those people to manage their own business," Block said. "Obviously, we have a responsibility to work, and grow, and improve the business, and we will figure it out as we go, but there is no concept that we are going to make radical changes."

The bulk of Comcast's legal work is done by about 25 firms; it is represented by seven in Philadelphia, including Morgan, Lewis & Bockius L.L.P., Dechert, and Cozen O'Connor.

In the NBCU deal, Comcast turned to its New York counsel, Davis, Polk & Wardwell L.L.P., its primary firm for complex, big-money transactions.

But, because NBCU has widespread global interests, Comcast needed representation in Europe and Asia. For that it turned to Freshfields, Bruckhaus, Deringer L.L.P., one of London's so-called magic-circle firms, which will handle much of the company's legal work outside the United States.

Though the size and complexity of the NBCU deal likely means that Comcast's legal budget this year will grow significantly, the overall trend is toward clamping down on costs, Block said.

"We want to feel that the firms have a commitment to be businesslike and won't rely on asking us for annual increases without regard to facts and circumstances," he said. "We can be creative. We want them to be creative."