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Episode 68: Legal Procurement: Understanding What the Buyer Wants to Win RFPs with Dr. Silvia Hodges Silverstein, CEO of Buying Legal Council

Guest: Dr. Silvia Hodges Silverstein, CEO of Buying Legal Council

Episode 68: Legal Procurement: Understanding What the Buyer Wants to Win RFPs

Sharon:  Welcome to the Law Firm Marketing Catalyst podcast. Today, my guest is Silvia Hodges Silverstein, CEO of Buying Legal Council, the international trade organization for legal procurement. The organization supports professionals tasked with sourcing legal services and managing legal services supplier relationships through advocacy, networking, education, research and information. She’s an author, speaker and adjunct professor at Columbia Law School. Buying Legal Council just held its Legal Procurement Conference for the Americas a few weeks ago in New York City. Today, Silvia will tell us about the organization and the top insights from the conference. Silvia, welcome to the program.

Silvia:  Glad to be here.

Sharon: Glad to have you. Can you tell us about your career path? You ended up in—let’s call it an unpredictable area. How did you get here?

Silvia:  It’s definitely an unusual area; you can say that. As you said, I’m the CEO of the legal procurement association, Buying Legal Council. I’ve researched purchasing behavior of clients when they buy legal services for almost two decades, and I’ve spoken, as you can imagine, with lots of in-house counsel and CEOs and CFOs on how they buy legal services. I’ve written a lot of papers, articles and a few books about legal services procurements, among them the “Legal Procurement Handbook.” Actually, we just published a couple of years ago our book for firms to really understand what they should do with procurement. It’s called “Winning Proposals.” Around 2010, I discovered that legal procurement was involved in buying legal services and like probably most people, I was surprised at first and I thought, “I didn’t know that procurement was involved in this.” I thought it was so interesting, specifically what GlaxoSmithKline was doing, that I co-authored a business book case study on GlaxoSmithKline’s approach to conflicts in professional services, in particular legal services. As I researched the topic in general and started to organize and to connect with legal procurement professionals and share these practices, at some point in time, people were like, “When is our next meeting?” At first I said, “I have other things do,” but that’s sort of how we started.

Sharon: Oh, wow! I know it’s quite a thriving, dynamic organization.

Silvia:  Thank you.

Sharon: It took on a life of its own in a sense. What would you say is the purpose of Buying Legal Council?

Silvia:  As I said, we really focus on research, education, efficacy and all these things. The thing is procurement professionals typically, unlike in-house counsel—we can talk about legal operations in a moment—procurement typically changes what they call a category. So, it might be all different things that they buy. Legal is one of the categories that a procurement professional might work in and let me say this right away: it is typically not the first job that a procurement professional gets to source legal services and tell in-house counsel which law firms they should use for the next big M&A deal. No, that’s not what’s happening, but basically, you have a lot of people that might be in the category or might be dealing with legal services for one, two or three years, and so we do a lot of education on that. We have a number of different monthly webinars for our members. We look at all these on-boarding things. It’s really about giving them best practices through these different materials, giving them a way to network with each other at the conferences, but also through our new virtual roundtables. Then, because most of our members are experienced business people, but typically do not have a legal background, what we started a couple of years ago is we offer legal lessons to them. Basically, we have different courses on aspects of the law. For example, this week, we had a partner from Denton’s talk to us about U.S. contract law 101. We do all these different things to make them better and more sophisticated buyers, if you will.

Sharon: I can see how that would be useful to somebody who doesn’t have a legal background and has to buy these services. In terms of your membership, is it people who are in the procurement department, or can it be anybody from any size company who has to buy legal services outside the company?

Silvia: I would say the vast majority of our members are in the procurement department, and it’s really the companies that bring in procurement. At a conference, I mentioned, “Oh, legal procurement is not a mass sport,” and then somebody said, “Like fencing.” I’m like, “Yeah, I guess like fencing.” And someone said, “Well, I like polo better.” So, I don’t know if we’re fencing or polo, but anyway, only the largest companies in the world that have legal spending that is not only tens of millions of dollars, but literally hundreds of millions of dollars annually worldwide, those are the ones that bring in procurement. So, many of our members are from procurement. We have some that are in legal operations departments and we have some in-house lawyers. It can be anyone who guides legal services.

Sharon: Interesting. Why should those in legal marketing or business development in large law firms pay attention to Buying Legal Council? Should they pay attention to what you’re doing at all?

Silvia:  Absolutely. We actually have a program called “friends,” which are the sellers of legal services such as law firms or alternative legal services. We have for them quarterly legal procurement calls, because when we had our calls, there were a number of legal marketers who were like, “Silvia, can we take part in these calls? We’ll just listen. We’re going to be quiet.” I was like, “Yeah, but the procurement people might not want that.” So, we started these legal procurement dialogue calls where we always have a sophisticated procurement professional talk about what they like and what they don’t like and what’s important to them and answer questions about anything on legal services.

The client’s behavior, we know, is always changing and evolving, but as you know, in the last decade we have seen a particular shift in that law firm or supplier and client relationship. For many years, our clients worked with their trusted advisors and the firms focused on relationship building with in-house counsel. I’m not saying that relationships are dead; I’m definitely not saying that, but in addition to having a relationship and being a pleasure to work with, it also needs to make business sense to work with you. A data-driven business approach has been added to the mix, with the procurement professionals on the one hand. Then on the law firm’s side, they can either be the BD department or people in the pricing department, or sometimes in marketing or finance, those are the counterparts.

Sharon:  You mentioned data-driven decision-making and that was the theme of your most recent conference. Can you tell us what some of the key takeaways were from that?

Silvia: Yeah, absolutely. I’d say the top three takeaways are that clients are investing in technology with increasingly lots of money and they expect our firms to do the same thing. To remain successful, law firms need to understand the kinds of approaches to buying legal services. Actually, if I might digress for a second, they need to understand who’s involved in a decision-making process, how clients identify potential providers of services, how they invalidate competitors and how they ultimately make a decision and select a firm. Those are things that I think law firm marketers absolutely need to understand. But to come back to answering your question, clients invest in technology and expect their firms to do the same is one of the takeaways. Another one of the things that law firms absolutely need to have on their radar is cybersecurity and other risks. They are on their clients’ radars and are top priority, so law firms that are lackadaisical about these types of risks are in a situation where they might end up losing their clients because they cannot prove they are doing everything they can to prepare against these risks. Then the last one is probably not a surprise. Clients expect their providers to be really efficient and effective these days, so good quality is always important, but efficiency is really expected at this point in time. Law firms need to be able to not just talk the talk, but walk the walk and showcase how they’re doing this.

Sharon: When you say that, are you saying that’s efficiency that’s being measured?

Silvia:  Yes, absolutely. It starts with careful scoping, really understanding what the client wants and then saying, “O.K., here are different scenarios that we see,” and then showing how they can be efficient and how they can help clients to achieve the goals they have in the best possible way.

Sharon: I’m thinking about early on when procurement started coming into the process, how a lot of law firms, no matter what size, their hackles went up, like: “What are you talking about? Procurement people? What do they know? They purchase paper for the company. They purchase the paper clips or post-it notes.”

Silvia:  Or widgets, yes.

Sharon: Are you seeing more acceptance of this, or is it just because nobody has any choice in it?

Silvia:  That’s a very good question. I do remember around 2011, 2012, after any speech that I gave during that time, I couldn’t wait for some partner to come to me and basically—well, either they would say it during the session or they would come afterwards and say, “So, when is this going to be over?” And “When is this going to be over?” really means “When is procurement finally going to go back in its corner and leave us alone?” The answer is, it’s now 10 years later and they’re still there.

I can tell you we had a CPO, a procurement officer from a large university, at one of our conferences in the past and it was really interesting because when I asked him at the end of his presentation if he had any nuggets of wisdom for us, he leaned over from the stage and looked at the audience and said, “I just want you to know that when procurement has its fingers in a category, we don’t let go.” I think that says it all. This is just our time. There’s so much more analytics. There’s so much more transparency. The business and data side, as we’ve said before, has become so much more a part of our normal lives. This is definitely not going to go away and it’s continuing to develop in this direction, and if anything, we’ll probably see more of that.

Sharon: I would think so, definitely. Call it an idea whose time has come. You couldn’t have done this 15 years ago or 20 years ago.

Silvia: Oh, absolutely not, no.

Sharon: At the conference or in general, your organization gives annual awards in the categories of—

Silvia:  Yes, we do.

Sharon: And this year you added diversity and inclusion, and pricing. What made you decide that it was time to add those?

Silvia: Let’s start with pricing. Pricing is front and center on clients’ minds, and as you know, law firms have been recruiting pricing people for the last few years left, right and center. They’re the hot item in many law firms, and robust scoping and sophisticated and reliable prediction of how much things will cost is really important, so now pricing’s definitely a hot area. With awards, we want to showcase what’s going on in the marketplace and who is doing cool things that might inspire others, so that’s why we started that.

Then diversity and inclusion is particularly important for procurement professionals because, as you are probably aware, for corporations, in order to get government contracts, they need to show that they apply or use diverse suppliers, so they expect the same thing from their suppliers. They expect their suppliers to be diverse or do something in diversity. It’s as important as—and maybe we should add this next year—corporate responsibility. Rules are becoming increasingly influential when picking firms and this is particularly true when all things are equal.

Sharon:  That’s interesting. When you gave the award for pricing to firms doing cool things, can you give us an example of a cool thing? What stood out in these categories that made you say, “Oh, that’s really innovative. That’s really pioneering”? Without breaking any kind of confidentiality or anything.

Silvia: GlaxoSmithKline won the first award for pricing that we gave in 2019. Why did GlaxoSmith win? The company has been really pushing the envelope for legal procurement and methodologies for the last decade, but in particular they have developed and implemented and vetted this process where 85 percent of all their external spend with outside counsel and ancillary service providers are now under alternative billing arrangements. It is really amazing. I know when they started 10 years ago it was less than 3 percent and now it’s over 85. They provide the budget owners with a clear methodology on how the savings are achieved and they have made it a personal performance measurement for GlaxoSmith managing attorneys. It’s gotten a completely different importance for the in-house counsel as well.

Sharon: When you say budget owner, is that the in-house counsel managing—

Silvia: Yes, typically.

Sharon:  Where are you going next with your organization? When is your next conference or what is your next research project? What would you like us to know about what’s next?

Silvia:  We’re really excited about next year because we want to have a completely new approach. Sometimes you just need to do things differently, change them up a little bit, and what we’re going to do for next year is a process where we will ask members what their most burning business challenges are, and then for each of these most burning business challenges for which they need solutions, we’ll develop scenarios. Then we’ll invite providers in these different areas to—sort of like a Shark Tank situation—pitch their solutions. Rather than pitching business to get some investments, they can tell us what their solutions are and showcase how their approach is the best solution to these business challenges. We’re not aware that anyone is doing this yet, so we’re really excited about that. And next June in London and then next July and August are going to be conferences.

Sharon:  It sounds very, very interesting and exciting. Silvia, thank you so much for being here today.

Silvia:  Thank you.

Sharon:  To everyone listening, that wraps up another episode of the Law Firm Marketing Catalyst. If you would like to contact Sylvia, we’ll have her information in the show notes. If you like what you heard and you would like to hear more, you can subscribe on iTunes or wherever you download your podcasts, and please rate us.  We’ll be back next time with another thought-provoking guest who can help move your firm forward. Thank you so much for listening.

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