In the large business arena, we are starting to see some interesting developments that impact the way law firms are selected for work – which in turn is starting to impact the role of rain-makers in firms.
In larger companies, procurement teams are becoming more active and influential in the legal field. General Counsel are being pushed harder to do more with less and C-suite executives are becoming less convinced that selecting law firms is different from selecting property managers or other suppliers.
Procurement brings a more disciplined and rigorous approach to selecting firms that focuses on costs, but also awards “points” for how well law firm values align with the core values of the company, the types of processes in place to undertake work, what value-added items are being offered and others.
Keybank’s procurement team in the United States runs online legal RFPs, while GlaxoSmithKline has run over 5,000 auctions for legal work last year that saved the company over $20 million.
But there is more.
Larger inhouse legal departments (such as in HSBC, Barclays, Lloyds Banking Group, Credit Suisse and Citigroup to name a few) have gone a step further. According to Stephen Allen, Head of Global Legal Services Transformation at PwC, “There is a growing trend for corporate legal functions to engage a COO of Legal. This is in direct response to the burgeoning demands on the function and the need to have a key person responsible for ‘taking care of business’”. This marks the final shift of the General Counsel role away from actual day-to-day legal work and into a more valuable strategic role. The COO of Legal is now the person making decisions on law firm selection along with procurement – again using clear metrics that dive more deeply into the law firm operations than ever before.
All this is new to traditional law firm rain-makers who value relationships above everything else; who are used to shmoozing to get files.
In this brave new Procurement/COO world, relationships are becoming less important to winning files – process and value-add will trump relationships every time.
Does this mark the beginning of the end of the rain-maker’s reign?
And the beginning of the end of origination credit as a relevant metric for paying huge draws?