Law department procurement: Is buying legal services the same as buying laptops?

Topics: Alternative Legal Service Providers, Billing & Pricing, Business Development & Marketing Blog Posts, Client Relations, Corporate Legal, Efficiency, Law Firms, Legal Demand, Legal Innovation, Legal Managed Services, Legal Operations, Legal Service Vendors, Process Management, Procurement

procurement

For years now, corporate law departments have been asked to work with their companies’ procurement or purchasing departments. Most general counsel (GCs) and chief operating officers (COOs) push back on that request. After all, finding the right law firm for a matter, vetting the firm, and setting fees is not the same as buying 1,000 laptops or 5,000 paper clips. How can the company’s procurement professionals possibly be of any help in the buying of legal services?!

The traditional feeling among in-house legal teams is that procurement will just get in the way and make the retention of law firms impractical. There is worry that procurement will make companies hire the cheapest law firm or other legal vendor, regardless of that firm’s suitability for a particular assignment. After all, as we know, many intangible factors go into hiring outside counsel and legal professionals.

But for the past few years, RFPs have gained popularity as a tool to hire outside counsel. Indeed, other types of legal services — such as e-discovery vendors and suppliers with less “one-to-one customized counsel” — are very well suited to the same kind of purchase process as buying other routine items. So, naturally, it would seem that procurement should be an even bigger aid in those situations.

In these times of extreme cost controls, there is more pressure for procurement to run your RFPs. In my experience, partnering with procurement can actually be a plus. The corporate law department at which I was COO saved approximately 30% in legal fees when working with procurement. I learned that there are sound reasons for using your company’s procurement team when conducting RFPs for legal services.

To that end, here are some critical steps to make your law department’s relationship with procurement a win-win:

1. Collaborate with procurement — You should invest the time to explain the various fee structures by which law firms and alternative legal service providers (ALSPs) can be paid, what you look for in a lawyer or law firm, what factors are important in selecting outside counsel (g., highly regarded for a particular area of expertise), and how you plan to parse out your work. This is an excellent opportunity to strategize about alternative fees, law firm payments, and available cost savings.

2. Educate just one or two procurement folks — Select maybe one in the US and one in Europe if you do business there, and bring them into your circle. Ask your head of procurement to designate those particular people as the law department’s go-to

3. Permit procurement to draft the RFPs — You will find some sections that procurement typically uses with other bids that really don’t apply to lawyers, in which case you can delete them and explain the deletions to your assigned procurement resource. You will also undoubtedly need to add some provisions. In making these changes with the procurement pros knowledge, they can then continue to adapt their templates to legal suppliers. That way, you are equipping the procurement resources to create specialized RFP and pricing templates that work for you.

4. Trust the procurement team’s systems — In my experience, procurement will have better systems for issuing RFPs and handling the replies than most corporate law departments. Those systems may include portals with law firms that can track bidding and deadlines; or you could use procurement’s existing tools to easily track fee offerings and the law firm’s diversity numbers. But more importantly, these systems will include spreadsheets and other analyses that help you compare suppliers.

5. Go global — Procurement has sophisticated technology for pricing and services, including satisfaction reports of you, the customer. And procurement undoubtedly has software that can handle numerous locations and currencies with ease. This allows law departments to negotiate unified, global fee structures.

6. Involve procurement in final selection — When the finalists are selected, invite your procurement representative to participate in the final selection interviews. You may find that some of the queries that differentiate vendors of paper clips also apply to law firms.

Using procurement when vetting and hiring outside counsel and ALSPs improves your corporate law department’s credibility with the company’s business executives. It also permits your department to easily measure savings and similar wins, since procurement’s tools are designed for data collection, comparison, and reporting.

Give it a try. You may find that the folks in your company’s procurement department are your new best friends.