Oct. 2 (Bloomberg) -- DuPont Co. has turned its 195-person legal department from a drain on profits into a money-maker.

Lawyers at the Wilmington, Delaware-based chemical company brought in $290 million in revenue last year, including a $92 million asbestos settlement with more than a dozen insurers.

The asbestos agreement in December 2006 resulted from a three-year-old DuPont program to find ways to generate revenue by filing lawsuits the company would not otherwise have initiated or by seeking licenses from companies using its patents. The law department has brought in $630 million since 2004, according to DuPont assistant general counsel Thomas Sager.

``I felt we were often times perceived as a cost center and a drag on earnings,'' Sager, 57, said in an interview at DuPont's headquarters. The legal department's budget was about $230 million in 2006, he said.

Lawyers at International Business Machines Corp. and Qualcomm Inc. are also cracking down on patent violations to generate income. DuPont, the third-largest U.S. chemical company, has gone a step further by letting its lawyers shift from filing paperwork to filling the company's coffers. The department generated more than 1 percent of the company's revenue last year.

DuPont lawyers are scouring files for potential contract claims or signs of anticompetitive behavior that may lead to antitrust damages. Company attorneys, who are pressing their outside firms to work on a contingency-fee basis to keep costs for the new litigation program down, are also trying to bring in money by recovering debts DuPont had written off.

`Big Money'

``It's big money,'' said Rees Morrison, a consultant at Hildebrandt International Inc. ``I don't know of other companies doing it.''

DuPont has a committee of lawyers who are charged with identifying ways to recover money and calculate an expected return each year.

``We've asked them to serve as our eyes and ears and identify through whatever means -- word of mouth, periodicals, trade press -- opportunities where DuPont might advance a claim or where we believe our rights have been perhaps infringed,'' Sager said.

In 2004, DuPont's legal department brought in $108 million, Sager said, followed by $235 million in 2005. Last year's high of $290 million was helped by the insurance settlement.

Higher Costs

The push has come at a time when companies are faced with higher costs in their law departments. A survey published this month by Hildebrandt said U.S. corporate legal bills rose 6 percent last year.

Company lawyers often worry about hurting earnings, said Susan Hackett, senior vice president of the Association of Corporate Counsel in Washington. DuPont is in the middle of a three-year campaign to cut fixed costs by $1 billion.

``General counsel struggle regularly with quantifying the value they provide so they are seen as contributors rather than cost centers,'' said Hackett.

Still, Hackett said lawyers shouldn't take too much credit for recouping money in lawsuits over products other business units created.

``It's a difficult line they walk if they try to send a message that they are responsible for the underlying value of products and services,'' Hackett said.

Sager said ``most'' of DuPont's intellectual property cases are geared toward recovering money rather than defending its own patents. While declining to name specific cases, he said DuPont typically has a docket of 15 to 20 active intellectual property cases and is a plaintiff in about three-quarters of those.

Hewlett-Packard

DuPont also recovered $5 million from four shipping companies over price-fixing claims.

Hewlett-Packard Co. started a program to generate more revenue from intellectual property in January 2003 and now has about 185 active licensing projects.

``Companies need to be more diligent about protecting IP, monetizing IP,'' said Joe Beyers, company vice president for intellectual property. Revenue from intellectual property at Hewlett-Packard has increased tenfold since 2003, Beyers said, declining to disclose the amount.

The goal of DuPont's lawyers is to recover $100 million in 2007, less than in previous years. The target is lower because it was less certain they can find large recovery opportunities, Sager said.

``It's a function of the pipeline,'' he said.

The company has turned to targeting debts the company had written off and is trying to sell about $80 million in claims it's owed by Brazilian farmers for pesticides.

Selling Claims

It will probably sell the claims to ``any of the major institutions that play in Latin finance,'' said William O'Connor, an attorney in the New York office of law firm Crowell & Moring, who represents DuPont. He said he's also trying to sell DuPont's claims in bankrupt companies, such as auto part makers.

In the early 1990s, DuPont begin cutting the list of law firms it hired to reduce costs. Once 450, the number today is 42. DuPont again is altering its relationships with outside lawyers by requiring them to forgo traditional billing by the hour and handle cases for a share of any recovery.

``We want them to have some skin in the game,'' said Sager.

The firms that handled last year's insurance settlement, Pittsburgh-based Kirkpatrick & Lockhart Preston Gates Ellis and Beaumont, Texas-based MehaffyWeber, reduced or waived their hourly rates and shared about $15 million of the settlement.

One company that wants to mimic DuPont's efforts is Hillenbrand Industries Inc., a Batesville, Indiana-based maker of coffins and hospital beds. General Counsel Patrick De Maynadier and two other company lawyers visited Sager in April to learn about DuPont's recovery program. Hillenbrand's starting its own program and has hired two law firms to work on a partial contingency fee basis.

``We felt like we had a duty to find opportunities where we might be leaving money on the table,'' De Maynadier said.

To contact the reporter on this story: Carlyn Kolker in New York at ckolker@bloomberg.net.

Last Updated: October 2, 2007 16:28 EDT