Vendor Management
Lisa Girmscheid, Rockwell Automation
Mike Russell, Ingersoll Rand
ACC Legal Ops Maturity Model
External Resource Management
Challenges the LegalOps Role faces
with service provider oversight
 Many types of service providers involved
 Varying types of service provider relationships
 Uniquely “legal” requirements potentially at odds with
traditional corporate procurement policies and procedures
 Necessity to train and monitor service provider performance
A Wide Range of Service Providers
Arbitrators /
Mediation
Legal Research
Information
Governance / Records
Management
Legal Technology
Court Reporters
Legal Process
Outsourcing (LPO)
Discovery
Outside
Counsel
Relationship & Engagement
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Matter / Attorney Level
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Individual Requests for Proposals (RFP)
Master Service Agreement (MSA)
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Statement of Work (SOW)
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Panel of Providers
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Preferred Supplier Programs
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Reverse Auction
Getting started with Vendor Management
Document
Identify
Prioritize
• Current state process
• Organization Goals/Strategies
• General Counsel guidance
• Gaps / Issues
• Makeup of providers
• Efficiency / Cost / Capabilities
• Actions that need to be taken
• Produce a short-term and long-term strategy
• Consider convergence where appropriate
Why consolidate (“converge”) the number of
legal service providers – what’s the objective?
• Can facilitate closer partnership & collaboration
– Potential cost savings & predictable work volume
• Establish best-of preferred providers by
– Practice Area/Specialty/Matter Type and/or Geography
• Improved in-house relationship management
– More personal direct contact, reduced administrative
overhead
• Things to watch out for – risks
Budgets
• Holding providers accountable
• Aligns strategic objectives with spending
• Manages spend proactively vs. reactively
– Ensure tools in place to monitor
• Works to support in-house and external
ongoing collaboration
Data-driven Decision Making
• Actual/Budget performance history
– Internal business client focus on chargebacks
– Budgeting process governance
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Rate comparisons by timekeeper
Benchmarking for type of work and geography
Avoids surprises – remain proactive
Facilitates ongoing management of matters
– Risk of too many matters with one firm
• Results – outcomes, spend management
Additional Supplier Value-Adds
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CLE credits
Educational Workshops
Pro bono or other philanthropic support
Secondments
Diversity
Industry involvement & support
– ACC, ILTA
Supplier Evaluation
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Understanding of the client’s business
Appropriateness of effort
Results - Outcome
Service - Responsiveness
Resource management
Overall satisfaction
– Including collaboration / 360 degree feedback
– Would the in-house team use this provider again?
• The results can then help with quantitative comparisons between
firms, with legal spend added into the equation for context
Alternative Fee Arrangements (AFAs)
• Encourage efficiency by the provider
– Application of Legal Project Management methodologies
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Can enhance predictability of spend
Greater share of the risk
Potential to leverage supplier competition
Must monitor quality
AFA Type
Pros
Cons
Easy budgeting/forecasting.
Useful in managing large practice areas
(i.e. Patent Prosecution, asbestos) that
have high # of matters + common work
elements.
Hourly data still needed for future
statistical reporting and performance
evaluation. Mechanism needed to include
all hourly details + heed the flat or fixed
fee.
Law firm shares in the risk – onus is on
them to manage the cost.
Easy to forecast, especially in high cost
practice areas (i.e. asbestos litigation).
Must monitor costs regularly and compare
data to firm data. (This is an example of
why the need for prompt and accurate
billing).
Potential for paying high cost for low
quality work.
Contingent Fee
Firm has “skin in the game.”
Difficult to forecast spending if firm only
bills once at the end of the matter. There
is the risk of overpayment.
Success-based: mutually define a target
for success, and offer a bonus if met. One
variant is the “80-120”. Firm bills at 80%
of normal rate, but if goal is achieved,
they get a bonus and are paid at 120% of
rate.
Risk sharing tightly tied to quality of work.
Somewhat difficult to measure success.
Billing at 80% causes some difficulty in
forecasting total cost.
Blended Rates: fixed rate/timekeeper role
(Partner, Associate, Paralegal).
Freeze rates – no worries about rate
increases. May get high quality
representation for lower than average
rates.
Little or no control over who is billing (so
approve timekeepers up front). Must
consider what to do if Associate is
promoted to Partner.
Hybrid – one or more AFA
Flexible way to manage costs by phase
(i.e. fixed for phase 1, contingency for
phase 2).
Need to pay close attention to detail, and
firm’s administration must be well versed
in AFAs.
Flat or Fixed Fee: can be monthly, annual,
or life of matter.
Capped Fee: agree upon a “not to exceed”
cost for a matter or group of matters, for a
specified time period (annual, life of
matter). Consider offering a “rebate” if
total $ is X% under the cap.
Value Billing
What is the service worth to the organization?
Definition of success… at what cost?
Trust, but verify
Characteristics of successful vendor management programs
• Ensure in-house support throughout the development process
• Including IT/Data Security where necessary
• Continually improving vendor management through periodic data review
• Evaluate metrics to ensure they clearly communicate the health of the
relationship
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A small, focused number of metrics is more effective than pages of data
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Monitoring should clearly show Normal vs. Abnormal & countermeasures
• Share expectations and scores with outside counsel to improve relationships
and performance
Summary / Q&A
Cost effective vendor management is
optimized as a result of thoughtful process
mapping and resource allocation, leveraging
technology and data analytics tools and
streamlined communication.