Cliff Notes and Takeaways 2: Sylvia Hodges’ “Color Within the Lines When Dealing With Procurement”

Dr. Silvia Hodges has been a leading voice arguing for the rise of Procurement in sourcing legal services.  Her latest article, “Color Within the Lines When Dealing With Procurement,” provides an excellent synopsis of her views, with insights from many other commentators who have questioned the status quo.  Dr. Hodges notes that “despite the clear need for Procurement, its existence ‘tends to generate consternation in both sellers and buyers alike’ (quoting Timothy Corcoran).”

The inspiration for her article is Mitch Kowalski’s new book, “Avoiding Extinction:  Reimagining Legal Services for the 21st Century,” which envisions “how the law firm of the future will succeed, with laser-like focus on delivering high-quality legal services, better, faster and cheaper.”  I have not yet read Mitch’s new book (time to order mine!), but all who have seem to be impressed.

Smart clients are catching on.  As Law21’s Jordan Furlong notes, smart clients want a firm that “sells results – not time.”  He finds:

Kowalski’s law firm model a great response to what clients want – and in particular to what procurement has been pushing for in recent years:  getting value, achieving more efficiency and predictability.

Smart law firms are realizing that the days of wine and roses are over and that they need to adjust to the new normal.  As Dr. Hodges’ notes:

The fact is that today more and more corporations…involve Procurement and/or embrace Procurement tools when sourcing legal services.

Procurement reminds the players in the legal market that results are what clients want and pay for, not effort.

In the face of increasing pressure (about time) from clients, law firms can and should increasingly welcome Procurement into the picture.  To succeed in the future, firms need to have an:

Understanding the strategic aim of the client is paramount, particularly when Procurement is involved.  Even more important is being able to see a clear, unambiguous link between the client’s strategic aims and the criteria used to evaluate potential suppliers.

Or, as 3 Geeks and a Law Blog’s Toby Brown notes:

Procurement’s corporate mandate [is] to drive down costs while holding quality at an acceptable level.

By understanding these client desires and the increasing role of Procurement in the sourcing process,  smart firms are advised to “color within the lines” when it comes to responding to client RFP’s, i.e., pay close attention to what the client (and specifically Procurement) wants, and carefully tailor the RFP to those specifications.  In other words, “arm them with the information they need to achieve these objectives (quoting Melania Wenstrup of BDO).”  And in many instances, as discussed in Validatum’s “Keep Your Powder Dry – the Hidden Cost of RFP’s,” firms can increase their “strike rate” by carefully vetting (and passing on those that aren’t a good match) all RFP’s.

• Client Takeaway:  A sea change is occurring across the legal industry that is providing smart clients with a massive opportunity to shift the balance of power back to where it always should have been – with the client.  To expect GC’s to stay atop of this massive and quickly-expanding field is unrealistic.  The time has come for smart companies to hire a Chief Legal Officer (CLO), whose sole duty is to take advantage of these heady times by delivering the same or better legal services for significantly less money.  There are now a myriad of tools out there to do this and the ROI on such a move would be immediate and substantial.  Dr. Hodges sets forth a real world example of the benefits of a CLO via the success Barclay’s Bank experienced after hiring Bjarnie Anderson all the way back in the Dark Ages of 2001.