The general counsel of your $30 billion conglomerate approaches you with a request. As the new GC, she’s looking to make her mark while addressing the unique challenges brought on by COVID. She’s tasked you with a critical mission: Discover how the corporate legal department can reduce outside counsel expenses.
This was the hypothetical scenario presented in a recent debate hosted by Buying Legal Council and Onit. Three teams of legal operations professionals examined how to accomplish this for this fictional company, which has $200 million in legal spend, a panel of 100-200 law firms and 75 internal staff in multiple countries. Here’s an overview of what each team proposed.
Team One: Bring More Work In-House
- William Bremner, Sr. Director, Law Department Management, Consilio (captain)
- Vianka Wong, Sr. Corporate Paralegal, Tronox
- Roycee Hasuko, Director of Product Engagement, SimpleLegal
The first team proposed in-house staffing optimization, including work analysis and skills assessment, to preserve in-house positions while maximizing existing resources. This included a value review of all outside counsel work based on a level of complexity, quality and cost. Based on this research and resulting analytics, the team proposed a Legal Entity Management beta program that brought more work in-house and resulted in 60% program savings. When extrapolated to an entire year, the team found a potential for outside counsel savings of $34 million.
Team Two: Leverage Alternative Legal Service Providers (ALSPs) More
- Robin Snasdell, Managing Director, Consilio (captain)
- Jo Ellen Hatfield, Sr. Manager, Procurement Professional Services, Bunge Ltd.
- Brad Rogers, COO and Chief of Staff, TIAA
Team Two determined that the best way to achieve savings with the lowest risk and better results is to leverage ALSPs. This “replacement cost revolution” relies on new firms offering alternative ways to get work done at a lower cost. Lawyers spend 25% of their time below their license and permanent staff can eventually end up overqualified. The ALSPs offer numerous opportunities, including costing three to seven times less than in-house or law firms, instant access to talent and expertise and the ability to “plug and play” repetitive tasks with established and consistent performance metrics.
Team Three: Renegotiate Terms With Existing Outside Counsel
- Silvia Hodges-Silverstein, Buying Legal Council (captain)
- Greg Kaple, Sr. Director Legal Department, Kaiser Foundation
- Richard Brzakala, Director Global Legal Services, CIBC
Team Three advocated for renegotiation to focus on transparency, partnership and innovation. In this scenario, the company’s relationship with firms goes beyond transactional work. However, there is still the need to balance the value of those relationships with the company’s fiscal responsibility to shareholders ahead of a potential economic downturn. The team recommends cost management actions such as a temporary moratorium on market-rate increases, budgeting, leveraging technology to reduce costs and an emphasis on working effectively and efficiently. As a result, cost savings could measure up to $1.75 million with information security mitigating against higher costs on items such as class action litigation and increased insurance premiums.
After a round of questions from GC judges Stasha Jain of Onit and Michael Flanagan of Consilio, debate attendees selected the winning team.
We won’t spoil the results here, but we do invite you to watch the recorded debate to learn about the strategy and tactics recommended by each team. Congratulations to all the teams on their insightful work.
This debate is part of Lean Into LegalOps, a virtual learning and networking program for legal operations professionals worldwide. For notices of future educational events, sign up here.