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Five key sourcing tactics to help the legal department lower external legal costs

Asked to pick five techniques that a procurement group should advocate the legal group to follow, here are my choices. I am assuming a legal department of approximately 10 lawyers or more, which would likely mean a minimum of $5 million dollars spent on at least 30 law firms.

  1. Prepare a table of expenditures for the past three years that show by law firm the fees and disbursements paid them during the previous three fiscal years by various subject matters (See my post of March 25, 2008: a spend-by-firm table.). The cutoff could be something like a minimum of $10,000 paid to a firm in two out of the three years.

  2. Either draft guidelines for outside counsel or revise the existing one to keep up to date on such techniques as e-billing, discount levels, formats of bills, and incentive arrangements (See my post of July 11, 2008: guidelines for outside counsel with 16 references.).

  3. Set a policy of competitive bids, in whatever form is mandated, for all retentions where the spending is expected to exceed, say, $50,000 in a quarter (See my post of Aug. 15, 2008: competitive bids with 35 references.).

  4. Develop policies regarding when lawyers (and which lawyers) can instruct outside counsel (See my post of July 2, 2007: guidelines for how and when to retain external counsel.).

  5. Set more formally and enforce procedures for invoice review (See my post of April 13, 2009: bill review with 6 references; and March 2, 2008: bill review with 25 references.).