28 October 2016

Harnessing competitive tension to drive value

Insights

Many conversations with large organisations involve the statement, “We have a formal panel in place so we are getting the greatest value we can”. Others start “I have firms I trust and they always do the best by me.”

Whether an organisation has a formal panel, informal panel or a relationship based approach, by using competitive tension in-house legal teams can ensure they are delivering the best value for their organisation.

The question is how do you determine the most effective strategy to lead to the best outcome?

Some organisations go through the arduous and time-consuming process of panel selection to produce a formal panel with a negotiated and agreed rate card. By going through this process, they are demonstrating, both to their external legal service suppliers, and their internal clients, that they see the value in competitive tension and the value for money it can drive.

For organisations with an informal panel/relationship based approach, they are putting an intrinsic level of trust in their law firms to deliver the best value for their organisation.

I find it interesting that organisations see competitive tension as being either a singular event or not applicable due to the specialised nature of engaging external legal resources. This begs the question of why is there this variation in emphasis?

In a recent conversation, a General Counsel told us, “Competitive tension delivers real value to my business. Even the intermittent use ensures greater reliability in terms of estimates received and approach presented by a firm”.

In other words, keeping law firms on their toes avoids the pit of complacency and maximises value delivery.

At Lawcadia, it’s an area we have considered and developed a solution to help companies find the right approach.

So how do you go about it?

There are some key points to optimising competitive tension:

  • Structure how you engage firms in a way that requires them to “pitch” for matters to demonstrate how they can more effectively deliver the quality advice you require.
  • Focus on the scope. Spend the time to develop a comprehensive scope. The tighter the scope the more effectively the law firm can estimate the work involved and provide recommendations on the best approach.
  • Pro-actively manage the scope and any out of scope variations so you can ensure things keep on track.
  • Put the onus on law firms to update you regularly on incurred, work-in-progress and anticipated costs compared to the cost estimate/budget.
  • Test the market regularly. This allows benchmarking and tracking of what the market can offer.
  • Track the successful firm against their proposed service delivery, actual service delivery and the outcome achieved using relevant metrics.
  • Regularly evaluate the firm and provide feedback on how they are performing against the market. Reinforce good results and good behaviours. Bad behaviours and poor advice should have consequences.
  • Implement processes and systems that allow for all aspects of legal procurement to be tracked and continually evaluate, learn and improve.

At Lawcadia, we have developed a platform that supports this process and helps businesses manage their external legal resources. Ultimately this allows companies to leverage competitive tension in a managed way that delivers the right level of service and quality whilst saving time and money.

To find out more, visit www.lawcadia.com.

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