Software that helps a law department empower clients yet clamps down on outside counsel costs

Rick MacKenzie, and associate general counsel at BMO Financial Group in Canada, offers some insight about how his bank intends to reduce outside counsel expenses by 10 and 15 percent over three years. As described in LEXPERT, Vol. 8, July/Aug. 2007 at 63, the bank’s new procurement system takes advantage of customized software developed in-house.

“Anyone within the organization who needs to purchase legal services must pick from an online list of preferred suppliers — firms that offer a wide range of legal services — or a secondary list of approved suppliers — usually more specialized firms. Purchases of more than $5,000 must be approved electronically by the legal department. If anyone tries to buy outside legal services without going through the electronics store, the law firm will not get paid — a powerful incentive for everyone to cooperate.”

This system keeps an eye on expensive uses of outside counsel yet gives clients the right to buy de minimis amounts of outside guidance (See my post of Oct. 1, 2006 on one department’s limit of four hours a month.).