Legal Procurement: The Game Changer

In more and more corporations, legal procurement are taking over what is traditionally viewed as a central function of corporate legal departments: the sourcing and pricing of legal services., says Melissa Maleske in her article Legal Procurement Changes Rules Of Law Firm Engagement.

“As law departments continue to focus on spending, procurement has become a key piece of the puzzle, stepping into a role that many lawyers aren’t trained in — namely, making well-informed purchasing decisions and negotiating with and managing the work performed by outside service providers.”

“The legal department typically sees its role as managing the risk and keeping companies out of trouble, and they’re not typically trained to reduce cost. It’s not necessarily part of their mindset,” says Silvia Hodges Silverstein, the executive director of the Buying Legal Council, a trade group for legal procurement professionals. “Whereas when the CEOs and CFOs look at how much companies spend on legal services, they’re thinking, ‘That is so much money.’”

Across industries, corporations focus on disciplined, informed decision-making about law firms and law firm management that stresses value and efficiency. “That’s procurement’s wheelhouse to a T, so it’s no surprise that legal procurement is becoming another new normal, rather than the novel proposition it once was.”

Read the rest of Melissa Maleske’s article in Law360.

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Legal and Procurement: Sending Mixed Signals

The concepts of efficiency and productivity have been largely ignored in the professional services context: Professional services are complex in nature due to the relatively higher degrees of buyer-seller interaction and their relatively higher degrees of customization. Efficiency, on the other hand, is driven by the potential for standardization in the process. Efficiency in a professional services setting, therefore, sounds counter-intuitive, says Jas Kalra, Doctoral Researcher in Operations & Supply Management at Alliance Manchester Business School, the University of Manchester, in his recent blog post “Insights from the ‘Buying Legal” conference on our most recent legal procurement conference in London.

Jas notes the triadic relationship between the legal department, procurement, and the law firm. “This was one of the most discussed issues at the conference and highlighted some of the issues that could emerge because of the differing expectations of the budget-owner and the procurement department from the service-provider.”

He explains that this triadic relationship results in the client sending mixed signals to the service-provider and negatively affecting the satisfaction levels. “It is the communication-gap and the instances of maverick buying in these triadic relationships that leads to the service quality breakdowns. This triadic relationship needs to be managed in order to manage the quality of these service relationships.”

Jas says that this reminds him of a study on the purchase of marketing services that recommends that the procurement department should take on a role similar to that of an internal consultant and operate in the advising capacity to the budget-owner and should control the outcome by investing more time in the service-specification processes.

However, Jas notes that few companies today “actually leverage their procurement departments in the early stages of the professional service procurement.” 

He believes that procurement departments still have some way to go before they can exercise a more active role in the procurement of professional services. “Understandably, there is an element of resistance from the budget owners, but Supply Managers need to develop and demonstrate project management and risk management competencies and practise a form of internal selling and get a level of ‘buy-in’ from the budget owners and the senior management.”

Read Jas’ further observations and recommendations here.

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Does she not “lean in” enough?

Clients care about diversity. In particular women’s initiatives are a high priority to many corporate clients today. When clients make diversity a priority when picking law firms, female team members or even women-led teams should soon be commonplace in our industry. In many countries around the world, more than half of law students now are female. Many associates are women. Nevertheless, as an industry, we still have a lot of work to do.

A number of studies discovered that female lawyers make significantly less than her male colleagues. What’s curious, many law firm leaders told me that they make no difference in pay based on gender. Male and female lawyers on lockstep are said to make the same amount of money, and the eat-what-you-kill approach is said to be gender-blind.

So – what causes her to earn less money?
Is it her -bad- career choices?
The matters she works on?
Is she not striving hard enough?
Or not “leaning in” enough?
Do female lawyers work less than male lawyers?
Are they perhaps less successful than male lawyers?
Are they less productive than male lawyers?

Watch the video from the International Bar Association 2015 conference: Removing the Glass Ceiling from Above

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