Procurement: Part 1 — Evaluation and Process
Part one of a three-part series on how procurement impacts law firm selection.
Procurement has become a determining force and deciding factor with respect to which law firms get the work.
On September 17, 2015, three procurement leaders from Canada’s top-tier corporate industries — financial services, energy, and pharmaceutical — provided sharp observations and candid commentary on what they want, need, and expect when hiring outside counsel.
The three were Marco Perez, Senior Director, Head of Procurement USA & Legal Global Category, Royal Bank of Canada (RBC); Vincent J. Cordo, Global Sourcing Officer, Shell; and, Justin Ergler, Director, Alternative Fee Intelligence and Analytics (Global), GlaxoSmithKline (GSK).
Nancey Watson, a proposal consultant specializing in the legal, accounting, engineering, and telecommunications sectors, moderated the discussion held in Toronto.
Proposal and Firm Evaluation
Client-centric thinking and customized proposals are an expectation, and evaluation is as much an art as a science.
Legal procurement began at GSK in 2008 because, as Justin Ergler explained, “legal needed to be a good steward for GSK’s money.” Ergler, who developed Alternative Fee Arrangements (AFAs) for GSK worldwide along with ROI-style metrics said that while firms are compared side-by-side, they need to “be proactive and get involved” and “help procurement look good” by offering ideas for improvement.
Marco Perez, whose team is responsible for finding synergies across RBC and who handles 600 law firms servicing the bank worldwide, echoed these comments. He added that procurement will be aware of a firm’s ability to do the work, and will welcome different and beneficial ways of doing things.
Ergler commented that stock responses are not appreciated and that customized responses, especially those that demonstrate understanding of the client and/or industry put a firm head-and-shoulders ahead of its competition. He said that if a firm already works with other areas of the company, it’s a smart idea that this be highlighted. This comment was part of an observation that some firms will approach a client as though both parties have never done business before and that this lack of basic due diligence reflects very poorly on the firm as a whole.
As to a proposal itself, continuity of writing style and “crisp info and details” is what Vincent Cordo wants. It should be noted that “crisp info” was repeated a number of times by each of the three — the message being to drop the drivel and stick to facts.
Cordo, who most recently was Global Director, Client Value at Reed Smith LLP, now uses his pricing and proficiency skills on the client-side. This includes AFAs and Legal Project Management (LPM) pertaining to outside counsel, pricing and service delivery, and matter management.
Best Practice on Process
Procurement’s best contact is often not a lawyer.
From his experience working at a number of top-tier US law firms, Cordo made the observation that in many cases there is “no sales glue” between a firm’s marketing and business development people and its lawyers, and that this disconnect results in revenue leakage for a firm.
Furthermore, these three gentlemen made it crystal-clear that procurement people need to deal with “their best contact at the firm.” They were empathic that procurement’s best contact may not be a lawyer and that oftentimes it is a CMO, COO, or the like because they know how to sell.