Do it before the #Activist investors call for #Cost-cutting

Bill Ackman, Nelson Peltz, and other activist investors have been in the media for some time now, demanding companies to cut (more) costs in addition to growing revenue. They are not alone with their demands for cutting costs. We can see a clear trend in the legal industry: For years, legal services used to be largely exempt from the intense cost scrutiny other business units and functions have been facing for years. This is no longer the case.  Legal spend has become a line item that few CEOs or CFOs can ignore. In more and more companies around the world, legal procurement – the purchasing department or corporate function responsible for acquiring goods and services  – is quickly gaining importance in sourcing legal services and managing relationships with law firms.

Procurement applies business discipline to legal services. It is generally much less focused on relationships with trusted firms than the legal department. It compares and contrasts law firms, uses data and develops evidence-based rationale for major reductions in legal spending.

According to studies of the trade organization Buying Legal Council, the main drivers to bring in procurement are the desire to:

  • Managing cost/reducing supplier spend
  • 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.
  • Achieving more objective comparisons of legal service providers through measuring and benchmarking outside counsel’s value
  • Streamlining operations
  • Improving efficiencies
  • Finding better ways to structure fee arrangements
  • More reliable budgeting
  • Increasing predictability and transparency.

Why legal procurement? Could the legal department itself not apply business discipline? Yes, however, many CEOs and CFOs believe that the legal department benefits from procurement’s core competencies in getting better value from its suppliers. Top management is convinced that legal procurement can make value-added contributions that go beyond what any functional department like legal could accomplish by itself. Involving procurement in the sourcing of legal services has worked in other functional areas and there is no reason to believe that this won’t hold true for legal.

Learn more about legal procurement approaches and join us in London on 28 September to discuss EFFICIENCY in legal work and in Chicago on 19 October to discuss METRICS & BENCHMARKING.

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Ken Grady: How To Get Law Firms To Change

The legal category is a buyer’s market, clients today have more power than many of them realize. However, client must be strategic about getting law firm to be more efficient, more cost-effective, more transparent or whatever else is the client’s goal. In the Buying Legal Council‘s most recent Legal Procurement in Brief conference call Ken Grady of Seyfarth Shaw recommended enticing firms to change through a benefits-for-change strategy (“what’s in it for them?”) rather than threatening with negative consequences.

When negotiating with firms, be aware of what motivates the firm, Grady said. Does your work fit the firm’s strategic plan? Are you a “dream client” for them? What drives a firm to take on low margin commodity work is not the same as what attracts another firm to high margin bespoke work. Clients today have the most opportunity to drive change for middle-range work as many firms are still trying to figure out how to succeed in this highly competitive market.

Members of the Buying Legal Council can access the Cheat Sheet “How to Get Law Firms to Changeshere.

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Legal Procurement Dialogue with Law Firms

Getting more and more RFPs from procurement? Corporations around the world now include procurement when purchasing legal services.

If you’re wondering what procurement professionals are looking for, dial into the Buying Legal Council‘s Legal Procurement Dialogue conference call for law firms on September 16.

Click here to sign up

As the organization for legal procurement professionals, the Buying Legal Council seeks a dialogue with law firms and wants to make sure that law firms have a clear understanding of what legal procurement is all about. The conference calls are “open mic” sessions where outside counsel, BD professionals, marketers — any stakeholder in legal — can ask a seasoned legal procurement professional anything they ever wanted to know about legal procurement. Get answers to:

  • How to best work with procurement
  • How procurement evaluates law firms
  • The do’s and don’ts when procurement is involved in selecting law firms
  • And anything else you want to know about legal procurement

The expert, seasoned legal procurement professional Jason Winmill has been working in legal procurement for over a decade and has been involved in many groundbreaking legal procurement initiatives in a variety of Fortune 500 comanies.

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