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A bizarre case study about a procurement situation

Having recently skewered a paragraph in an article that described and mangled a mythical situation about choosing a lawyer as a CEO (See my post of Jan. 4, 2008.), I soon stumbled upon another bizarre paragraph. Deconstruct this one from the McKinsey Quarterly, 2007 No. 4 at 118, in an article entitled “Inventing the 21st century purchasing organization”:

“At another company the intelligent use of purchasing helped rein in rising legal costs by separating legal services into commoditized segments (including paralegal and research needs) and creating sourcing strategies for each individual segment. Meanwhile the company introduced systematic performance metrics – such as indemnity averages – and created an independent general-counsel office staffed with lawyers trained in purchasing basics. Through these measures the company consolidated its provider base to 9, from 900, capturing significant savings in the process.”

Legal research is not commodity work by itself, since it usually means the answer was not easily know or readily available. That aside, my amazement mostly is directed at the statement that the company created a law department, one that was “independent” (from what?), and that the department hired lawyers “trained in purchasing basics.” What? First, get good lawyers; second, show them how to manage outside counsel. Then, unbelievably, the nascent law department slashed its law firms (“provider base”) from 900 to 9 law firms. I just don’t believe that paragraph accurately describes what happened.

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