1. Lisa Girmscheid, Rockwell Automation Mike Russell, Ingersoll Rand
Vendor Management
Lisa Girmscheid, Rockwell Automation
Mike Russell, Ingersoll Rand

2. ACC Legal Ops Maturity Model External Resource Management

3. Challenges the LegalOps Role faces with service provider oversight
Many types of service providers involved
Varying types of service provider relationships
Uniquely “legal” requirements potentially at odds with traditional corporate procurement policies and procedures
Necessity to train and monitor service provider performance

4. A Wide Range of Service Providers
Arbitrators / Mediation
Information Governance / Records Management
Court Reporters
Legal Process Outsourcing (LPO)
Legal Research
Legal Technology
Discovery
Outside Counsel

5. Relationship & Engagement
Matter / Attorney Level
Individual Requests for Proposals (RFP)
Master Service Agreement (MSA)
Statement of Work (SOW)
Panel of Providers
Preferred Supplier Programs
Reverse Auction

6. Getting started with Vendor Management
Document
Current state process
Organization Goals/Strategies
General Counsel guidance
Identify
Gaps / Issues
Makeup of providers
Efficiency / Cost / Capabilities
Prioritize
Actions that need to be taken
Produce a short-term and long-term strategy
Consider convergence where appropriate

7. Why consolidate (“converge”) the number of legal service providers – what’s the objective?
Can facilitate closer partnership & collaboration
Potential cost savings & predictable work volume
Establish best-of preferred providers by
Practice Area/Specialty/Matter Type and/or Geography
Improved in-house relationship management
More personal direct contact, reduced administrative overhead
Things to watch out for – risks

8. Holding providers accountable
Budgets
Holding providers accountable
Aligns strategic objectives with spending
Manages spend proactively vs. reactively
Ensure tools in place to monitor
Works to support in-house and external ongoing collaboration

9. Data-driven Decision Making
Actual/Budget performance history
Internal business client focus on chargebacks
Budgeting process governance
Rate comparisons by timekeeper
Benchmarking for type of work and geography
Avoids surprises – remain proactive
Facilitates ongoing management of matters
Risk of too many matters with one firm
Results – outcomes, spend management
*** provide specific decisions that could be made from the various data points ***

10. Additional Supplier Value-Adds
CLE credits
Educational Workshops
Pro bono or other philanthropic support
Secondments
Diversity
Industry involvement & support
ACC, ILTA

11. Supplier Evaluation Understanding of the client’s business
Appropriateness of effort
Results - Outcome
Service - Responsiveness
Resource management
Overall satisfaction
Including collaboration / 360 degree feedback
Would the in-house team use this provider again?
The results can then help with quantitative comparisons between firms, with legal spend added into the equation for context

12. Alternative Fee Arrangements (AFAs)
Encourage efficiency by the provider
Application of Legal Project Management methodologies
Can enhance predictability of spend
Greater share of the risk
Potential to leverage supplier competition
Must monitor quality

13. AFA Type
Pros
Cons
Flat or Fixed Fee: can be monthly, annual, or life of matter.
Easy budgeting/forecasting.
Useful in managing large practice areas (i.e. Patent Prosecution, asbestos) that have high # of matters + common work elements.
Hourly data still needed for future statistical reporting and performance evaluation. Mechanism needed to include all hourly details + heed the flat or fixed fee.
Capped Fee: agree upon a “not to exceed” cost for a matter or group of matters, for a specified time period (annual, life of matter). Consider offering a “rebate” if total $ is X% under the cap.
Law firm shares in the risk – onus is on them to manage the cost.
Easy to forecast, especially in high cost practice areas (i.e. asbestos litigation).
Must monitor costs regularly and compare data to firm data. (This is an example of why the need for prompt and accurate billing).
Potential for paying high cost for low quality work.
Contingent Fee
Firm has “skin in the game.”
Difficult to forecast spending if firm only bills once at the end of the matter. There is the risk of overpayment.
Success-based: mutually define a target for success, and offer a bonus if met. One variant is the “80-120”. Firm bills at 80% of normal rate, but if goal is achieved, they get a bonus and are paid at 120% of rate.
Risk sharing tightly tied to quality of work.
Somewhat difficult to measure success. Billing at 80% causes some difficulty in forecasting total cost.
Blended Rates: fixed rate/timekeeper role (Partner, Associate, Paralegal).
Freeze rates – no worries about rate increases. May get high quality representation for lower than average rates.
Little or no control over who is billing (so approve timekeepers up front). Must consider what to do if Associate is promoted to Partner.
Hybrid – one or more AFA
Flexible way to manage costs by phase (i.e. fixed for phase 1, contingency for phase 2).
Need to pay close attention to detail, and firm’s administration must be well versed in AFAs.

14. Value Billing
What is the service worth to the organization?
Definition of success… at what cost?
Trust, but verify

15. Characteristics of successful vendor management programs
Ensure in-house support throughout the development process
Including IT/Data Security where necessary
Continually improving vendor management through periodic data review
Evaluate metrics to ensure they clearly communicate the health of the relationship
A small, focused number of metrics is more effective than pages of data
Monitoring should clearly show Normal vs. Abnormal & countermeasures
Share expectations and scores with outside counsel to improve relationships and performance

16. Summary / Q&A
Cost effective vendor management is optimized as a result of thoughtful process mapping and resource allocation, leveraging technology and data analytics tools and streamlined communication.