The Role of Procurement in the Selection of Outside Counsel

by Timothy B. Corcoran on November 24, 2012

Facebook Twitter Email Linkedin Delicious Reddit Stumbleupon

My friend Dr. Silvia Hodges recently asked me to contribute to a book she was compiling and editing, Buying Legal: Procurement Insights and Practice, published by the Ark Group in association with Managing Partner.  The book is a collection of articles from 32 leading authorities discussing the increasing partnership between the corporate legal department and the corporate procurement function to select and manage legal expenses, including outside counsel.  The book is divided into two parts, Section A is designed to benefit outside counsel and Section B is for in-house counsel and procurement professionals.  However, I recommend that anyone involved in the buying or selling of legal services would do well to read the entire book.

The involvement of procurement in the purchasing of legal services is swiftly becoming the ‘new normal.’ And not just for sourcing low-end, routine or commoditized legal services – but increasingly for higher-stakes legal work too! This critical new report will equip law firms and in-house legal and procurement teams with the necessary tools to make these new relationships successful.

It’s packed with original research, case studies, opinion pieces, practical approaches, and checklists that address the key challenges and opportunities that buying and selling legal services creates – from relationship building and management, to financial and strategic decision-making. Industry leaders, Riverview Law, Wragge & Co LLP, PwC, Dechert LLP, Kennedys Law LLP, Corporate Executive Board, Institute for Supply Management, Akin Gump Strauss Hauer & Feld LLP, Validatum, Vantage Partners LLC, Trusted Advisor Associates and many more provide insightful case studies and advice on key topics, including:

  • Benchmarking the procurement of legal services
  • Pricing and negotiation strategies
  • Bulk buying of legal services
  • Understanding the requirements of the procurement department
  • Successful complex tendering
  • Current trends in the procurement of international legal services
  • Procurement departments’ sourcing strategies
  • Building relationships with the CPO
  • The role of procurement in purchasing legal services
  • The positive and negative effects of discounts
  • Top tips for successfully procuring legal services
  • Trusted tactics to get the most from spending on outside services
  • Demonstrating law department value through analytics
  • Using technology to source legal services; and much more

The chapter I submitted is titled “Why CEOs Love Procurement” and discusses how corporations continually seek a competitive cost advantage.  This is particularly critical in challenging economies or markets when revenues are flat or declining.  A modern CEO doesn’t just look at growing revenue or decreasing overhead, but looks to lower the cost of goods sold and service delivery.  For law firm leaders faced with declining demand, increasing price pressure and competition from above and below, it’s critical to understand the role of procurement in managing a corporation’s expenses.  Lawyers who believe procurement is a euphemism for “selecting the lowest cost provider” are misguided.  Differentiation on factors other than price are critical, yet most lawyers and most law firms market in ways that are indistinguishable from the competition.  As I wrote a few years ago when I first tackled the role of procurement:  “A law firm that can demonstrate its prowess in managing to a budget through effective project management, that keeps the client fully informed of any changes to expectations, that staffs appropriately and doesn’t ‘overwork’ matters or expect clients to subsidize young associate training, is in a better position to present clear, quantifiable evidence of its higher rates.”

For a brief excerpt, visit here.  To purchase the book online, visit here or here.

 

Timothy B. Corcoran delivers keynote presentations and conducts workshops to help lawyers, in-house counsel and legal service providers profit in a time of great change.  To inquire about his services, click here or contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

Print Friendly

{ 2 comments… read them below or add one }

Mike O'Horo November 27, 2012 at 5:45 pm

Tim’s analysis, as always, is cogent. The one thing that the arrival of Purchasing or Procurement onto the scene signifies is maturity, as in, your service has sufficiently matured that the company can apply systems to rationalize and normalize its purchasing cost. Maturity means that the mystery is gone from that solution, so there are many equally qualified suppliers.

I acknowledge that Tim’s correct that non-price factors still matter. However, Procurement’s people, skills and systems exist so serve one purpose: to gather reliable data that enables the company to begin reducing its overall outlay for that category of good or service. Procurement’s job is to make sure that the cost trends downward. Initially, some of that can take the form of operating efficiencies that are relatively revenue-neutral to outside firms, but over time, nobody believes that corporations’ hunger for cost-reduction will be limited to improving efficiency. When you buy $50-100 million worth of anything, that constitutes leverage, and you’ll use that leverage to gain price concessions.

This is the overriding factor that would serve as a klaxon alerting me to find an emerging problem to solve, because the pricing trend for this aging one will go inexorably downward. Law firms aren’t organized to achieve continual internal cost reduction to preserve profit margins in the face of price erosion, so eventually they’ll end up squeezed as much as are suppliers for Wal-Mart, Dell, etc. That’s how the big boys play.

Fortunately, this is largely a BigLaw problem. The irony is that law firms lust after companies with huge legal budgets, not realizing that the more they buy, the more they know what’s worth a premium and what isn’t.

fiberglass norcold marine freezer August 13, 2014 at 9:32 pm

She has a charm that is slightly reminiscent of the childhood favourite Rosie and Jim’s Ragdoll, with a modernized interior to suit the 21st century traveller.

At times, your sailing instructor may need to issue an order and have it followed immediately.
If you’re worried about your stored wine going bad in the heat of your boat, you need to invite me
over.

Leave a Comment

{ 5 trackbacks }

Previous post:

Next post: