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In terms of reducing costs, innovative sourcing easily bests innovative pricing

This statement, which I summarized from remarks by Richard Susskind at last week’s conference, Generals of the Revolution, embodies much wisdom. The choice by a legal department of which law firm or other provider – the sourcing decision – should handle some piece of work determines the total cost much more profoundly than does the subsequent negotiation with the firm or vendor of costs – the pricing decision. We place too much emphasis on fee arrangements (the splinter) and neglect the more fundamental decision (the log) of who gets the fees.

Whom you choose changes the tab far more than the method by which you pay them. That inconvenient truth spells the end of convergence, since legal departments should select more widely and with more discrimination.

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One response to “In terms of reducing costs, innovative sourcing easily bests innovative pricing”

  1. Chuck Freeman says:

    While I cannot disagree with this statement, your conclusions are in desparate need of some quantitative analysis and empirical support. Additionally, I do not believe that a sourcing strategy should be adopted while a convergence strategy should be abandoned. High performing legal departments should pursue both strategies.