Anecdotally, in-house budgets are being scrutinised like never before, and law firm billing is starting to catch the attention of chief financial officers.
As almost any general counsel (GC) will tell you, legal teams are coming under sustained pressure to introduce metrics and benchmarks, along with more robust financial management and project management tools, to help demonstrate their grasp on value. In short, procurement methodologies are now being applied to legal services.
The numbers tell a different story.
Data from the Client Intelligence Report (www.clientintelligencereport.com) shows that in-house teams in the UK and US – the vanguard of legal innovation – are still reluctant to abandon traditional purchasing models.
The survey, which polls the views of almost 2,500 in-house respondents in the UK and over 1,500 in the US, shows that fewer than half of legal teams involve procurement at all when selecting a law firm. The only exception to this pattern was legal teams operating in the UK public sector, where slightly more than half (57%) of teams said procurement had some involvement when selecting or appointing a firm.
More surprisingly, legal teams in the US are less likely than their UK counterparts to work with procurement when selecting a firm: only 20% of US teams involved procurement at any stage in the selection process, compared to 28% of teams in the UK, while just 9% said they involved procurement from the start of the process, compared to 18% in the UK.
With 79% of FTSE 100 and 81% of Fortune 100 companies covered in the sample, the Client Intelligence Report reflects a large fraction of the global legal spend, and the numbers show that for all the talk about new purchasing models, there has been little actual change.
But, as law firms are well aware, talk of change is not all bluff. When the cost of traditional suppliers gets prohibitive, businesses tend to find ways of coping without traditional suppliers. This much was clear in the banking sector: a quarter of all US-based banks and nearly a fifth of UK-based banks said they involved procurement from the very start of a tender.
GCs’ buying habits may remain unchanged for now, but with groups like CLOC and The Buying Legal Council bringing legal procurement to wider attention it seems certain that one day, soon, the numbers will change.
Q: At what stage of law firm selection does the procurement department become involved? (Select one)
Source: The Client Intelligence Report