Page 8 - CCCA Magazine Summer 2014

{ PerFormaNCe iN tHe law dePartmeNt } ImproVIng the BusIness relatIonshIp WIth prImary laW FIrms By Richard G. Stock Fully 50% of companies that carry out a detailed analysis criteria and a list of frms to be invited, of their spending patterns for external legal counsel do procurement can assemble the RFP and manage the process effciently. Insurance not act on the fndings. companies, banks and pharmaceutical companies have been doing this for years. This was unheard of 10 years ago, as re- any general counsel accept that invitational request for proposal (RFP), taining law frms was a relationship-based they must have better data than having a discussion, and then drawing process with very little structure in it. mwhat their accounting systems can up the terms of engagement should take Today it is a recommended management produce—information such as number about 15 hours for a portfolio of legal practice to formalize the process by which of matters, their relative complexity, how work—but only a couple of hours for a external legal resources are retained. With law frms staff the work, and what the re- single complex matter. or without the support of a strategic maining fees and hours are on approved For those instances where a formal sourcing department, legal departments matters. RFP is sent to a select number of law should negotiate comprehensive terms of frms, quality responses are received by engagement every three years or so. An- Framing the question including the selection criteria in the nual adjustments to historical pricing ar- The use of external legal resources needs body of the RFP. Yet, inside counsel usu- rangements are not enough. to be managed regardless of the annual ally back away from doing this, in part legal spend. While it is possible to do this because they may be forced into making estimates and guarantees one matter at a time with one or two law a change from their existing law frms. Most organizations have accurate data frms, most legal departments do not have In fact, the real benefts in being explicit showing total legal expenditures by law the time to ask for or review detailed mat- about expectations and selection criteria frm. But they cannot break the information ter plans and budgets prepared by their are in leveraging current service provid- down by legal specialty or determine the law frms. Inside counsel do not have the ers to improve their offerings. number of hours paid for each category. In- templates, training or appetite to chal- side counsel need to determine the scope lenge matter plans and budgets. This is the role of procurement of work when calling for proposals. The especially true for litigation budgets. Procurement, or strategic sourcing de- frst step is to describe the types of mat- Most law frms have clients demanding partments, can serve as project managers ters and their frequency for each category innovation in matter budgeting, work al- in conducting an RFP for legal services. of legal work. location, the use of technology for service For the most part, legal departments be- The second step is more diffcult and delivery, alternative fee arrangements and lieve procurement is for purchasing “wid- consists of quantifying volumes of work more. And most can be quite responsive gets” and not really helpful for securing by category—that is, estimating the num- on each of these points, but the client has professional services. ber of hours for each category. This is to ask. The responsibility is with the cli- However, as long as the legal depart- essential if the company wants to move ent. Framing the questions, perhaps as an ment provides the scope of work, selection beyond a list of preferred law frms with 8 CCCa Magazine | suMMer 2014 été