LEGAL SOURCING STEPS IN TO THE SPOTLIGHT: PART 1

Iasta is pleased welcome a new guest blogger, Jason Winmill. Jason is a Partner at Argopoint Consulting LLC.  Argopoint has designed legal sourcing approaches for leading Fortune 500 companies that have been nationally recognized by The Wall Street Journal, Bloomberg News, and the Association of Corporate Counsel.

Bustling mid-town Manhattan was the location for a recent conference on collaboration between sourcing and the legal function.  On the rostrum, a seasoned sourcing executive from a Global 200 company was sharing his successful experience working with legal. Seated to his left, his colleague, a senior executive in the company’s legal department, would echo and amplify his comments. As they described a series of new approaches to purchasing legal services that had saved millions of dollars, some audience members began to shift in their seats, becoming increasingly uncomfortable.

The speakers had touched a nerve.  The audience, a mix of sourcing professionals and in-house attorneys, began to vocalize some of its anxiety, which seemed more like defensive denouncements than actual questions:

“At our company, legal matters move on tight timelines – typically days.  We would never have the time to involve non-attorneys in our hiring process.”

“Our legal department has good long-standing relationships with our outside counsel; this ensures the best outcome.  Our organization is satisfied that there is no better way.”

The contrast could not have been more stark.  Onstage, the speakers demonstrated that they had built a coherent multi-year partnership between sourcing and legal.   For some members of the audience, even the possibility of in-depth collaboration was raising not just tension, but outright ire.

Had the conference split into two camps: those, including the speakers, who were successfully collaborating and the many others in the audience who could only see reasons why sourcing and legal collaboration would be impossible?

More broadly, does this division reflect the state of corporate America – two very different camps?

“So, what could be responsible for the ‘great divide’ between those procurement groups actively working on the legal category and those sitting on the sidelines?”

By many accounts, sourcing is making progress in the legal category and delivering millions of dollars in saving.   Legal sourcing is emerging into something of a media spotlight.  A recent article in the Wall Street Journal noted that several global companies─ including GlaxoSmithKline, Toyota, Sun Microsystems, and eBay─ are using competitive bidding, sometimes referred to as “reverse auctions,” to purchase legal services (Lee B5).

For the first time, the Association of Corporate Counsel highlighted several legal departments (such as Home Depot and Medtronic) for delivering “substantial value to their clients through value-focused legal management skills”.  The American Bar Association is reporting that more and more leading legal departments, including American Express and Pfizer, are pushing for flat fees.  Pfizer is on the second iteration of its ground-breaking formal program to manage outside law firms, with the much heralded “P3” (Pfizer Partnering Program) having evolved into the “Pfizer Legal Alliance.”

“Compared to a few years ago, legal sourcing is now an area where I see major companies investing.  Doing legal sourcing properly does require a real investment.   It’s not a category where you can watch a few episodes of ‘Law and Order’ and fake it,” notes Justin Ergler of GlaxoSmithKline Legal Services Procurement, a rising star in this emerging field.

Stay tuned for Part 2, which will reveal what is responsible for the division between procurement groups that are actively working in the legal category and those that aren’t. This section will specifically explain why the legal category is different from other categories that sourcing pursues.

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