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A typical set of outside counsel management activities, described at Marsh Mac

In a recent interview, a senior lawyer at Marsh McLennan, Lucy Fato, recounted some history. “A few years ago, we started examining all the firms that we were using to come up with a preferred provider list in the U.S. and then we rolled it out in the U.K. We’ve now narrowed that list to the top 10 to 15 firms that we’re using on a more regular basis to see if we can drive more business to them, eliminating other firms that we were using on a more costly one-off basis. Now, with e-billing and the new matter management system, we will really be able to start tying all these things together and to whittle that preferred list down even further. These systems allow us to look at the firms more closely and analyze the value we’re getting from them.” Fato added: “we’re definitely getting a better handle on the firms and we’re doing a better job of trying to apply billing guidelines and rules in a more consistent way.”

The steps taken are quite typical for U.S. legal departments in recent years. (1) Narrow the list of law firms that are approved for use, starting in the U.S. (2) Extend the process to Canada or the UK. (3) Choose from that list a smaller group of preferred firms. (4) Concentrate the larger portion of total external spend on those preferred firms and exact from them concessions on rates, staff, training, etc. (5) Improve and extend outside counsel guidelines. (6) Enable these steps with software databases and electronic invoices. (7) Think analytically about the data collected. Not that these steps need to be followed in precisely this order, but there is a logic in the set and its progression.