Blog/Podcast: 6 Trends Impacting How Legal Procurement Departments Choose Law Firms
Legal procurement departments at corporations are a fairly new trend, but they’re not just a fad: legal procurement is here to stay (and continuing to grow). Despite the bad rap that it sometimes gets among law firms, legal procurement has its benefits, and understanding how procurement professionals choose law firms can shed light on how other types of clients select their legal service providers, too.
Legal procurement expert Dr. Silvia Hodges Silverstein has spent two decades researching the purchasing behavior of legal clients, and she uses her findings to help firms and procurement departments work better together. She shared six of the legal buying trends she’s seeing on the latest episode of the Law Firm Marketing Catalyst podcast.
- Clients are basing their decisions on data. For many years, companies chose law firms based on their personal relationships. Clients worked with their trusted legal advisors consistently and firms put most of their effort into networking with in-house counsel. But in the last decade, we’ve seen a shift in the client-law firm relationship. Clients still want to work with firms where they have personal connections, but it has to make good business sense as well. Companies are using data to drive their decisions, and the law firms they choose to work with not only have to look good on paper, but in the spreadsheet.
- Clients expect their firms to invest in technology. Companies are investing massive amounts of money in technology, from artificial intelligence to blockchain, and they want their law firms to embrace tech in the same way they do. Investing time and resources in technology is a sign that a firm is keeping up with the times and has all the capabilities a modern corporation could want. Having its own experience with tech can also make it easier for a law firm to understand any tech-related legal issues their clients might have.
- Clients demand cybersecurity measures. Any company with a legal procurement department is sizeable, and any sizeable company is deeply invested in cybersecurity. Cybersecurity (and the risks associated with a lack of it) is top of mind for clients, and they expect their law firms to have the same dedication to it. Firms that are lackadaisical about weak spots in their IT systems may put off potential clients or lose existing ones, simply because they cannot prove they’re doing everything they can to prepare against these types of risks. Increasingly, strong cybersecurity is becoming a baseline requirement for corporate clients.
- Clients expect efficiency. Providing high quality services is always important, but efficiency is expected, too. Even if a firm is the best at what it does, if it doesn’t do it in a timely, efficient way, clients will be frustrated and dissatisfied. The basis of efficiency is truly understanding a client’s business. From there, the firm can work through the different scenarios it sees and show clients the pathways to achieve their goals in the best possible way.
- Clients are looking for alternative pricing models. Pricing is front and center in clients’ minds, and they want reliable predictions of how much the legal services they buy will cost. Companies are more interested in alternative fee arrangements than ever, especially now that data and analytics are part of the day-to-day. As an example, at GlaxoSmithKline, 85 percent of its external spend with outside counsel is under alternative billing arrangements, compared to less than three percent 10 years ago—and many other companies are following suit.
- Clients want to see diversity and inclusion. In order for corporations to receive government contracts, they have to show that they’re using diverse suppliers. Since clients are held to a certain standard when it comes to diversity, they expect their law firms to hold themselves to a similar standard, too. This isn’t just about checking a box on a government form, either—diversity and inclusion is personally important to many procurement professionals, and it’s a sign of a quality law firm. A firm with a diverse team is also a firm that’s likely to have a broader perspective and range of talents.