This is live blog post from the Ark Group’s Managing Partner’s Law Firm Pricing & Profitability Conference. This session: The Buy-Side: Are You Selling What I Want to Buy? . [Please forgive any typos as I will post this as session ends]. 

Lynn D. Krauss, Assistant General Counsel Business & Finance Section, Law Department, Dow Corning Corporation;
Karen Dunning, Senior Director Legal Operations, Motorola Solutions, Inc.;
Lauren Trapp, Principal Program Manager Legal Operations, Motorola Solutions, Inc.;
Susan O’Brien, Principal at Sourcing Logics (former Manager, Legal Sourcing, Pitney Bowes),
Dr. Silvia Hodges, Adjunct Professor of Law, Fordham University School of Law (and Director of Research Services, TyMetrix)

Lynn Krauss

Why does procurement get involved in buying legal services? Often the CFO, CEO, or VP Procurement recognize legal spend is big and the company should get a handle on it.

At Dow Corning, lawyers evaluate law firms and decide on the acceptable set to consider. Procurement and Legal work together to articulate what services will be purchased, milestones, and deliverables. Procurement has much more experience than lawyers in scoping work. Procurement decides how the company will evaluate suppliers and how they will be paid. For example, they decide if an RFP is warranted or just a discussion with a couple of firms.

Criticality Grid (a 2×2) determines approach to purchasing. Axes are Spend and Number of Options

High Spend and Many Options: Market Driven
High Spend and Few Options: Strategic
Low Spend and Many Options: Standard
Low Spend and Few Options: Critical

Market driven means bidding (RFP). Fixed fees and aggregation occur in this quadrant.
Strategic means going after top firms and don’t expect same type of bidding; experience more important but cost still matters. Looking for a partnering arrangement. May or may not talk about fixed fees.
Critical area may not be a big spend but could be very important to company. More likely to go to a boutique firm because company wants the matter (or portfolio) to be important to the firm.
Standard: minimize company involvement and standard. Give work to low cost resources Example in this quadrant is contract review.

Law firms need to know in which a quadrant a project falls. That should determine how the firm tries to sell its services.

What procurement adds when it work with lawyers to buy services:
– Increased professionalism (engage strategic partners when necessary, do bidding process for repetitive work)
– Scope of work is better defined
– Payment terms articulated
– Increased emphasis on price / value
– Budgets established and then monitored
– Invoice may be reviewed multiple times
– Hourly rates may be fixed on discounted
– Selection of team at the onset
– Limitations on redundant work
– Supplier feedback

Motorola Solutions, Inc.

Motorola Solutions, Inc. has developed a repeatable procurement process. Will concentrate today on benchmark process and analytics. Use rate, spend, and attorney benchmark studies from TRI, CT TyMetrix, among others. Use a ‘visual ladder’ to show lawyer rates. Then creates a scattergram per law firm showing rates by lawyer, segmented by associate and partner and compare it to the CT Real Rate Report benchmark.

[See also Tweet stream for additional discussion.]