Procurement to Play Bigger Role in High-End Legal Work

by | Apr 25, 2016

Procurement to Play Bigger Role in High-End Legal Work

“Legal delivery has gone from ‘In a relationship’ to ‘It’s complicated,’’ said Mark Cohen, founder and CEO of Legal Mosaic, during the Buying Legal Council Professional Sourcing and Management of Legal Services conference.

Attorney, legal tech writer and CodeX Fellow, Monica Bay, recently reported Mr. Cohen’s insights for Above the Law. She noted procurement is about to play a bigger role in the purchase of high-end level corporate legal work.

Ms. Bay, who received an advanced copy of Buying Legal Council’s procurement study, also revealed for Bloomberg BNA, procurement now influences purchasing decisions of 45% of corporate clients’ high-end level legal work.

The report defines high-end work as high-stakes litigation or “complex/high-value” legal services.

“We believe that in the next few years, sophisticated Legal Procurement departments will regularly be involved in sourcing high-end, complex legal services. Almost nothing is off limits to using a professional, institutionalized approach that is normal in other areas of an organization,” the report concluded, as reported by Ms. Bay.

For context, the survey shows procurement also influences purchasing decisions of:

  • 86% of organizations’ commodities work (e.g. debt collection, non-complex contracts and minor litigation — defined more precisely as “matters of low to medium legal and financial exposure, etc.)
  • 64% of its bread and butter work (e.g. core work with medium to high legal and financial exposure that a company buys regularly.)

“It is a buyer’s market,” said Silvia Hodges Silverstein, executive director for Buying Legal Council and author of the report summary.  She added:

“Clients are flexing their muscles and bringing in procurement professionals who are commercial negotiators, trained to get better value for their employers.”

While GC’s still have the final say in who the company engages with for legal work, especially the high-stakes kind, the survey shows procurement has a growing seat at the table. Here are a few highlights to illustrate:

  • When asked who inside the company creates the short list of firms, procurement is named among the top three decision makers: 1) GC’s/Head of Legal: 87%, 2) In-house attorneys: 61%, 3) Procurement: 39%.
  • When asked what percentage of the legal budget procurement influences, more than 20% of respondents reported between 51-75%.

Legal Industry Reaction

Most experts seem agree the legal community needs to embrace these changes. However, some suspect how quickly this will happen may just come down to whether firms perceive the relationship to be just that, and not merely a business transaction.

“A healthy relationship is when two people develop a connection based on mutual respect, trust, honesty, support, fairness-equality, separate identities, good communication, and a sense of playfulness/fondness,” said Chairman of Proskauer, Joseph Leccese, during the conference as reported by Ms. Bay in Above the Law.

According to Mr. Cohen, as Ms. Bay reported in a separate CodeX blog post, both clients and firms are bringing new players into the buy/sell mix, moving away from a lawyer-to-lawyer (GC to law firm) decision to one that engages multiple parties on both sides. Presumably, a move that enables both buyers and sellers to settle on terms that are mutually beneficial.

“We need to bring a little more balance,” added Mr. Leccese. “It’s in everybody’s interest.”

* * *

This post is by Carla Del Bove, who provides support to the business of law software product line based in the LexisNexis Raleigh Technology Center.

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Photo credit: Flickr, perceptions (off), architecture_305 (CC BY-ND 2.0)

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