Although a relatively new concept, organisations are already seeing success with a strategic legal procurement approach. One clear example is Aon in Chicago which during 2015 spent 30 percent less on legal matters when they incorporated legal procurement practices and processes.1
What is legal procurement exactly?
Procurement in a broad sense is based on cost control, getting external suppliers to reduce prices and preventing departments from unnecessary spending through managing what is purchased. Legal procurement is focused on legal spend and make the buying of legal services more transparent and inform data-based decision-making. 2
A larger organisation might have a procurement professional work directly with their legal department.
Dr Silvia Hodges Silverstein founder and executive director of Buying Legal Council believes that “[Procurement officers] may be looking for ways to consolidate spend, or to increase spend with the goal of getting volume discounts. Law firms should be aware of procurements goals, objectives, challenges, and strategies”.
“Procurement professionals demand predictability, project and budget management even more than most GCs”
In reference to the goals of legal procurement, Silvia goes on to say, “Procurement professionals demand predictability, project and budget management even more than most GCs. … Procurement believes that if you know your business, you should know how long something takes and how much something should cost.”3
Michael Rynowecer, creator of BTI consulting group in the United States, said that after a survey of 330 companies with more than $1 billion revenue he found that “up to 20 percent of them involved procurement executives when hiring outside legal counsel”. The number of organisations using a bidding process has increased from 45 percent in 2014 to 56 percent in the last year. Furthermore, W. W Grainger, Archer Daniels Midland, Baxter International and Abbott Laboratories are other companies that have incorporated legal procurement into their organisations and it has driven efficiencies for them.1
Evidence shows that procurement is already involved in sourcing legal services in large corporations, particularly in Fortune 100 companies.4
Overall, this new concept is changing the way corporate clients manage all aspects of legal procurement. It provides a structured framework for buying legal services with simple procurement and management solutions for in-house legal teams.
Most importantly, it works.
REFERENCES:
1 Bushey, C. (2016). How lawyers are like office supplies. Crain’s Chicago Business. Retrieved 22 September 2016, from https://www.chicagobusiness.com/article/20160326/ISSUE01/303269990/how-lawyers-are-like-office-supplies
2 Law Practice Today | Power of the Purse – How Corporate Procurement is Influencing Law Firm. (2016). Americanbar.org. Retrieved 26 September 2016, from https://www.americanbar.org/publications/law_practice_today_home/law_practice_today_archive/january12/power-of-the-purse-how-corporate-procurement-is-influencing-law-firm.html
3 Silverstein, S. H. (2015). Research report: The state of legal procurement. In Silverstein, S.H (Ed), Legal Procurement Handbook (p. 126 – 132). USA: Buying Legal Council.
4 Legal Procurement: Sourcing is a Team Sport. (2016). Bna.com. Retrieved 26 September 2016, from https://www.bna.com/legalprocurement-sourcing-is-a-team-sport/
