Procurement: Part 3 — Performance Measurement and Best Practices

Part three of a three-part series on how procurement impacts law firm selection.

Procurement is as much about process as it is about results. And while cost control is an important factor, relationships are every bit as vital.

Legal procurement leaders from Canada’s top-tier corporate industries — financial services, energy, and pharmaceutical — were in Toronto on September 17, 2015 to explain the process and offer advice on how firms can best position themselves to win work.

Nancey Watson, a proposal consultant specializing in the legal, accounting, engineering, and telecommunications sectors led a discussion that included 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).

Performance Measurement

While responses to proposal requests are weighed and measured side by side, there are other factors that matter. As Perez commented, “It’s mostly about the relationships and how firms are helping us manage risk.”

Performance measurement really kicks in once work commences. Ergler observed that measurement is about comparing the proposal to the results and said, “If there are gaps, they need to be addressed.” He also asks firms how GSK can improve the process to save everyone time, stress and money.

Failure and Success Factors

No one who handles legal procurement is naïve to how traditional law firm structures work and how this can affect clients. These three procurement leaders observed that there is a disconnect within firms because individual lawyers want credit for themselves.

With full agreement from Ergler and Perez, Cordo observed that for lawyers, “The real driver is compensation.” And that there are key times for firms: “Q1 is for compensation; Q4 is for collections.” The unspoken message being that Q2 and Q3 are when many firms focus on getting and doing the bulk of the work.

There was consensus that failure is more apt to happen when there is only one relationship partner. There were comments from all three that “one lawyer is not a firm” and that they need to see “a bunch of lawyers as a united front representing the firm.”

There was also agreement that there are firms and lawyers who believe that previous business and personal ties will hold the client relationship steady. This is fanciful thinking since on both the client and the law firm sides, it’s inevitable that people will come and go. So, like any relationship, the one between the client and the firm needs to be nurtured constantly and consistently.

Part of the nurturing process means clearly showcasing – in both a proposal and while doing the work – how the client is better served by the firm that won the engagement. This type of distinction contained in writing and displayed by actions must be clear and definitive. In other words, walk-the-talk is not a casual phrase; it’s an expectation.

Famous Last Words

Times have changed and as Ergler commented, “No one is that special anymore.”

While change is difficult, not changing can be fatal. As Perez observed, “Firms are still doing things they way they’ve always done them.” And the others agreed when he stated, “Many firms are still doing things like they did 20 years ago and people like us won’t deal with them anymore.”

All three agreed that some firms believe that every dollar is a good dollar and that despite weak bench strength or inability to do the work, they will participate in the procurement process because they’re in it for the money.

The three procurement leaders further agreed that firms that choose to decline because their “A-team for this kind of work is at capacity” are the most impressive and attractive of all. They are also very rare.

These rare firms are considered the most distinctive, impressive and attractive because they know where their strengths lie, aren’t in it for the money, and want to bring their best skills and A-team talent to a client engagement.

Part One of this three-part series on legal procurement focuses on evaluation and process while Part Two explores expectations around pricing.