How Procurement Can Engage Legal Expense
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Justin Fogarty has an intriguing post up at Supply Excellence entitled, “Category vs Procurement Experience: Which matters more?“
I think that using procurement managers without any prior experience in legal services is one of the biggest obstacles to procurement penetrating legal spend. In my experience, procurement departments routinely make the mistake of using a strategic sourcing manager without a strong understanding of the legal field. Legal services are a unique animal, and there are a number of vital issues to keep in mind:
(1) Nature of the Law Firm Beast. You must dispense with the normal approach of treating a law firm as one company, as a law firm is not much more than a group of diverse people, each with a book of business, and the lawyers and staff that support each book. As a result, law firm wide statistics and quality management are often unhelpful and do not drive across the board quality improvement and spend reductions.
(2) No Year Over Year Savings. You cannot set a target of year over year reductions in legal spend. The law department often has no idea, for any given year, what may materialize. A sudden class action lawsuit could be filed, a major construction vendor may walk off the job, or a sexual harassment lawsuit could result. Insisting that the law department spend less money than the previous year without taking this into account alienates the lawyers who are already reticent to support any kind of spend management. The better approach is to compare apples to apples, and try to get year over year reductions in purchasing the same kind of legal service that was previously acquired, as well as looking into whether a particular legal service is needed in the first place.
(3) Legal Background. I’m not saying that the strategic sourcing manager needs a law degree and practice experience at a top Manhattan law firm by any means, but it’s a good idea to get someone who was at least a contract manager or assisted with litigation management in the past, so they can have the ability to properly interface with the naturally resistant legal department and make the most effective decisions to drive cost savings. In particular, I think paralegals would excel as legal category managers.
You can see our free legal documents and free legal forms for procurement agreements here.
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