“Law firms competing to handle GlaxoSmithKline matters can no longer rely solely on their long-term relationship with the company or its in-house counsel. Instead, firms must use an electronic auction where they have the opportunity to underbid their competition,” says Christine Simmons in Auctions Gain Favor Among Companies Seeking to Hire Counsel in the NY Law Journal.
“Reliance on reverse auctions is an example of the rising influence of procurement groups on legal departments,” she quotes me. ”Auctions are basically one of the tools that we see procurement [departments] apply to rein in the costs.”
The cost of legal services has grown such that companies need to have a better understanding of what the costs are going to be in order to run the business,” says Deutsche Bank’s Rose Battaglia, global COO for the legal and compliance department. An auction “leads us to a more competitive price to know what we’re paying for legal services.”