External Resources Management

EARLY

• Majority of outsourced work directed to law firms

• Law firms at arm’s length from in-house law department; relationships may be somewhat untrusting

• Law firms selected and managed by frontline counsel

• Ad hoc engagement and billing terms; billing generally on hourly rates; limited invoice review and analytics.

INTERMEDIATE

• Some consideration or use of legal process outsourcing vendors or alternative legal service providers (LSPs)

• Concerted effort to improve collaboration with law firms and LSPs (e.g., through feedback, conferences, joint process improvement efforts)

• Vendor consolidation underway; some use of preferred providers to gain leverage and improve operational efficiency

• Resources dedicated to managing supplier relationships (often under Legal Operations)

• Billing guidelines incorporated into e-billing/matter management systems and enforced through invoice review

• Some/limited use of alternative fee arrangements (AFAs); learning what types of work and how to implement them successfully

• Defining key performance indicators and developing a dashboard to track metrics, including cost-effectiveness of external resources

• Some informal or ad hoc law firm/supplier evaluation

• Legal recognizes the business case for diversity and inclusion (D&I) and begins to measure and implement programs to improve law firm D&I.

ADVANCED

• Right-sourcing an ongoing consideration and LPOs/LSPs often integrated into legal services delivery model; well-established preferred counsel model

• Suppliers considered value-producing business partners; systematic use of value-adds (e.g. training, secondments) and value-enabling capabilities such as project management and technology

• Outside counsel and vendor management centralized, dedicated function(s) with involvement in RFPs, engagements, pricing, and performance reviews to drive continuous process improvement and innovation; governance includes disciplined policy, exceptions, conflicts, and data security management

• AFAs well-understood and utilized according to established principles; systems smoothly incorporate/support AFAs in billing and metrics/dashboards; procedures exist to assess value and reconcile pricing to cost/scope variances

• Data-based decision-making in counsel selection/evaluation/pricing (e.g. outcomes are considered in law firm selection)

• Legal, Procurement, and Finance fully aligned and well-integrated with respect to supplier selection/management and spend management processes

• Standardized supplier quality/performance metrics; regular, structured, and mutual feedback

• Diverse suppliers proactively identified and metrics used to encourage D&I in staffing matters.

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