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Legal spend is on the frontier of procurement’s sourcing control

Cal. Mgt. Rev., Vol. 49, Summer 2007 at 44, has an article about how procurement’s next frontier is managing the supply of services. Figure 1 (at 46) puts legal spending at about 90 percent outsourced and about 15 percent of that is “controlled by formal supply management.” As compared to the other 16 outsourced services, the authors place legal services as more completely outsourced than all but two (only “Professional Services” and “Printing/Copying” and Construction/Engineering” are more outsourced) and with as little formal purchasing control as all but one (only “Inventory Management” is less controlled).

Data from law departments does not support the contention that 90 percent of legal spending is outsourced, since typically about 60 percent of total legal spending goes to law firms. As to formal supply management, I doubt that it reaches as high as 15 percent among US law departments.

Still, cavils like that aside, the point is that procurement experts view the legal department as the raw, untamed and wild West.