Using The Purchasing Department To Select Outside Counsel?

There is an interesting article today on Law.com about a new trend -- corporations using their procurement departments to help hire outside counsel. I don't see that as necessarily a bad thing unless, as the article notes, the task of selecting outside counsel is totally transferred to the procurement people who may not fully appreciate the nature of the legal work needed. As the article suggests at the end, if the procurement folks can be a value-add to the General Counsel in helping him or her get better value, e.g., legal talent comparable to what they had before for less money, then I don't see why a General Counsel wouldn't at least consider trying it.

What's distressing in the article is the traditional response from the outside counsel community:

"'There's a movement right now, across the board, to pay the lowest price you possibly can,' says Ed Hansen, a partner in the global outsourcing and technology practice at Morgan, Lewis & Bockius. 'On the surface, it seems like a good idea, but companies aren't able to differentiate what's a commodity and what's not. You can't buy outsourcing services like you buy pencils.'"

Now I'm sure Mr. Hansen is a very able lawyer and probably worth every penny for what he charges for his services. But to me, his quote is indicative of the "flat earth" kind of thinking still prevalent in so many law firms these days.

Of course, as a General Counsel, I would not select my outside counsel in the exact same way my company purchases reams of paper for the printers and copiers. But what is so special about law and lawyers that I can't inject some competitive aspect into my selection process that would incentivize my prospective outside counsel to provide me with a better value for my legal dollar?

I don't underestimate the value to a company of having a long-term relationship with a particular outside lawyer or law firm. It can lead to some savings by not having to re-educate a new outside counsel about what your company does or its culture. But at some cost point, that familiarity ceases to be a savings and will lead me to seek new counsel. After all, there are a lot of law firms in this country who have excellent litigators, employment lawyers, patent lawyers, etc. There are few cases or legal matters that would absolutely compel a company to select one particular lawyer or law firm at any cost.

Instead of stubbornly clinging, as it appears Mr. Hansen is, to the outdated notion that there is something super special about us lawyers that we should be immune to the economic pressures under which our clients operate, outside counsel should recognize the modern cost-cutting realities under which today's General Counsel operate and strive to be sensitive to those concerns. The article suggests that General Counsel work with their procurement departments to help the law department set up metrics or other performance standards by which the value of outside counsel can be measured, at least in part. Establishing budgets for outside counsel -- and making them stick to those budgets -- is also suggested.

Overall, I thought it was a very interesting and thought-provoking article. The only thing missing was a suggestion that businesses turn to law firms that will negotiate alternative fee agreements!