A 23% “incremental value creation” from an RFP-cum-convergence process

The ACC Docket, Vol. 27, Oct. 2009 on an ad after page 64, describes a cost saving result for outside counsel expenses that is nothing short of astonishing.

When Bruce Futterer became general counsel of General Electric Canada in January 2007, “he went to all the law firms that he knew or suspected were being used to provide services” for the company. Along with that effort, the law department identified “21 practice areas (or ‘rooms’) of legal services to be provided, narrowed the scope of external law firms providing those services, aligned them by “practice room” and achieved significant value creation along the way.”

In different words, Futterer converged his firms and focused them by areas of law. Each area of law has seven or eight firms that provide services. What amazed me is the next line. “Futterer shares that the law department also realized a 23% incremental value creation during the first year of this new strategic provider program.”

23 percent?! Of what? “Incremental value creation” may not be the same thing as a reduction in external legal spend, I realize, but how did he arrive at that stratospheric result?

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