Update on GE Capital Legal Services Auction
Last year GE Capital began an experiment to purchase legal services via auction (see my posting). Two years into the experiment, GE reports savings of up to 20%.
GE Capital Wins Big with Legal-Services Auctions in the Corporate Legal Times September issue quotes Barbara Daniele, general counsel of the GE Capital commercial equipment finance division: “We’ve realized dramatic cost reductions from the auctions – up to 20 percent for most areas, compared to 2003 rates.” Daniele makes some other interesting points:
- The “very best” firms have participated in auctions.
- Work quality has been high.
- GE has not yet bid out high-end litigation.
- Information technology is important in achieving these successes.
GE is a trend setter in law practice (e.g., creating a law department as good as any large law firm). This development raises at least two very interesting questions: (1) will other clients follow and (2) have the winning bidders simply accepted a lower margin or have they found ways to be more efficient, for example, by using technology? Comments welcome from anyone who can answer these.
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