BUYING LEGAL COUNCIL

Category: Research reports

Legal Procurement’s influence is quickly becoming ubiquitous. Legal services used to be largely exempt from the cost scrutiny other business units and functions have been facing for years. But no longer. Many companies, particularly those with significant legal spend and in regulated industries, involve Procurement when selecting outside counsel and ancillary legal services. The objective is to cut costs, ensure quality, and drive efficiency. And it is working.

This trend is not completely appreciated in the industry. It is rarely love at first sight, when the CEO or CFO introduces Procurement to the legal department to assist with selecting law firms and managing “supplier” relationships. But Procurement’s expertise in getting the best value for the company, managing the sourcing process, and finding the right suppliers for the right price at the right time, makes its involvement a compelling solution for top management.

The recent financial crisis and slow recovery acted as a catalyst and sped up the process for the adoption of Legal Procurement among many Fortune 500 companies and their international equivalents. Publicity about billing practices, big ticket spending, increased transparency, and profit pressure is at the root of this seismic shift.

The industry organization, Buying Legal Council, was formed in 2014 to support and educate Legal Procurement professionals and other buyers of legal services. It provides education and networking to its members and counts many Fortune 500 companies, multinationals, and government agencies among its members.

To better understand Legal Procurement practices and detect trends, the Buying Legal Council conducted a survey in January 2016 among Legal Procurement and Legal Operations professionals, in which 92 submitted their answers. This research represents the view of Legal Procurement and Legal Operations. In order to respond, the organizations had to have such a corporate function. Generally, Legal Procurement as a profession is still in its early days and while more common, is still not yet represented in every industry sector and/or region. We believe that the buying of legal services is still changing and likely to become more closely managed rather than less.

Please note that all findings should be seen as indicative, showing trends rather than absolute, representative data due to the sample size in a (still) unknown universe of Legal Procurement professionals, the effects of random sampling, and different mixes of survey participants in the different surveys.

Members and Friends of the Buying Legal Council access the White Paper on the “Members-only” (buyers of legal services) and “Friends-only” (sellers of legal services) part of the website.

Legal Procurement’s influence is quickly becoming ubiquitous. In many companies, it has become common and ordinary practice to involve Procurement when selecting outside counsel.

But just how common? And what does Procurement do? To find answers, the legal procurement trade organization Buying Legal Council launched its 2016 Legal Procurement Survey. We are still analyzing, but here is a sneak preview:

When we asked the question “In your organization, what level of legal services purchases does procurement influence?” The vast majority, 86%, answered they influence purchasing commoditized, routine legal services, such as debt collection, minor litigation, and non-complex contracts. But just under half of survey respondents, 45%, influence the purchase of high-end complex/high-value legal services, such as high-stakes litigation. And 64% influence “bread and butter” legal services, those between high-end and commodities. (More than one answer to this question was possible.)

In short: few legal services today are left untouched by legal procurement. The less complicated the service, the more numerous the competitors, and the more frequently it is bought, the more likely it is that procurement will be involved in selecting the firms. It’s an exciting time to be a legal procurement expert and it’s a frightening time for law firms long insulated from competitive bids!

To learn more about Legal Procurement, join us March 15 for the 2016 Legal Procurement Conference in New York: www.buyinglegal.com/newyork

 

Procurement’s role in buying legal services keeps evolving. Three studies on legal procurement (2011, 2012, and 2014) clearly demonstrate that procurement practices gain more and more influence on the category. In 2011, legal procurement was limited to a small number of very large companies, almost exclusively from the financial services sector and the pharmaceutical industry. Only three years later, many corporations turn to procurement for help in sourcing legal services. Fortune 500 corporations tend to employ their own legal procurement team while medium-sized companies hire consultants that organize legal procurement consortiums to achieve greater buying power.

Here’s what else I found:

  • Procurement gets more and more influence on the legal budget
  • Procurement’s role is that of the buyer, influencer, and gate keeper
  • Procurement is moving into higher-value legal services
  • Procurement expects significant discounts
  • Procurement’s tools include negotiations, reverse auctions, and billing guidelines
How has it changed in the meantime? Please participate in the 2016 Legal Procurement Survey: Click here

 

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