Silvia Hodges Silverstein is the executive director of Buying Legal Council, a legal procurement association. Silverstein also is an adjunct professor at Columbia Law School and Fordham Law School. She earned a PhD in law firm management in 2009, from Nottingham Law School. She’s based in New York City.
Monica Bay recently interviewed Silverstein for the Legal Executive Institute blog and for the Law Technology Now podcast (Legal Talk Network). Here are seven questions:
- What is the Buying Legal Council?
Silverstein: Buying Legal Council (BLC) is a global trade association for law firms and others who source legal services and manage supplier relationships. BLC has been operating for three years; our members are procurement professionals of Fortune 500 companies and international equivalents, in North America, Europe, the Middle East, Africa, Australia, Asia Pacific and Latin America.
BLC is all about networking and education. Our goal is to make legal procurement professionals more sophisticated buyers of legal services. Procurement typically sees legal as a “last frontier” — a very challenging, if not intimidating category.
General counsel and legal departments are no longer the only buyers of corporate legal services. Legal procurement is quickly gaining importance around the world.
- What about legal operations? Isn’t that the same as legal procurement?
Silverstein: Legal operations is responsible for managing the legal department. They are in the legal department and report to the general counsel. Many legal operation professionals have a law degree.
Legal procurement focuses on buying legal services and managing the business side of relationships with law firms and other legal services providers. Buying and negotiations is their forté. They are based in the procurement department and report to the chief procurement officer. The majority of legal procurement professionals have a business/finance background rather than a legal background.
- Why do companies involve legal procurement professionals?
Silverstein: In many corporations, legal services used to be more or less exempt from the cost scrutiny that other business units and functions have been facing for years. The 2008 financial crisis acted as a catalyst and sped up the process for the adoption of legal procurement.
Publicity about billing practices, big-ticket spending, increased transparency and profit pressure was at the root of this seismic shift. Companies with significant legal spending started to involve procurement in the evaluation and selection of legal services providers in the early 2000s. Early adopters were the highly regulated industries, such as pharmaceutical, financial, energy companies and utilities.
- What are the drivers that motivate General Counsel to procurement?
Silverstein: The GC and the team typically do not experience “love at first sight.” It is typically a top management mandate.
The main drivers for procurement are:
- seeking to manage cost and reduce supplier spending;
- ensuring that the company buys goods and services in compliance with company policies;
- making sure the company gets good products and services from reputable suppliers;
- wanting to achieve more objective comparisons of legal service providers through measuring and benchmarking outside counsel’s value; and
- increasing predictability and transparency.
- How does legal procurement measure and compare law firms, especially concerning request for proposals and alternative fee arrangements?
Silverstein: You will look at a number of things, including the team you will be getting and their experience in similar matters or types of matters. You will look at how they go about approaching matters; and depending on the billing approach, you may want to measure efficiency.
- Per unit cost (hours, pages reviewed, bytes etc.);
- Cycle time (how long does it take for process to be completed);
- Response time;
- Staffing ratio;
- Utilization (in-house lawyers/staff);
- Measure effectiveness: Outcome. Accomplishment. Quality. Satisfaction.
- Are there red flags that procurement looks for when evaluating their firms after work is done?
Silverstein: Procurement increasingly conducts post-matter satisfaction surveys. Were the goals achieved? They will look at discrepancies. Were the lawyers proactive? Of course, they will look at billing: Did they stay within budget?
They may also look to identify staffing issues: junior associates billing more than 10% of hours on a matter? Or partners spending more than 10% on clerical tasks?
- What should law firms do to get on the good side of procurement?
Silverstein:Clients will continue to reduce the number of providers they work with.
Firms should react now — or watch their competitors will win panel positions with clients you took for granted. It is both a threat and opportunity for the legal community. Winners will respond and deliver better results at lower costs.