Wall St. Journal on Legal Services Reverse Auctions | Oustide Counsel Auctions

Several big companies—including eBay Inc., Toyota Motor Corp. and Sun Microsystems— have used the tactic, known as reverse auctions or competitive bidding, to pressure law firms to lower prices, especially on high-volume work such as tax filings and intellectual-property transactions.

Legal Reverse Auction Tactic Spooks Lawyers

Spurred on by the economic climate, companies' use of a controversial auction process with outside counsel has surged. 

Several Fortune 500 firms—including eBay, Toyota, GlaxoSmithKline and Sun Microsystems— have used reverse auctions or competitive events.  GlaxoSmithKline began using reverse auctions last year to drive down fees for some services.  Sun Microsystems used the approach too, according to Mike Dillon, the company's chief legal officer.

FMC has relied on auctions to select outside counsel for some time. "Every attorney will tell you that every piece of work has to be custom-made, that's nonsense," says Jeff Carr, the company's general counsel.

Argopoint Weighs In

Argopoint’s more innovative clients are increasingly active in (and pleased with) their use of reverse auction when procuring legal services. Carefully designed and appropriately implemented reverse auctions can significantly reduce the cost of legal services without compromising the quality of legal services. Argopoint has helped clients use reverse auctions to measure legal service quality (e.g., the fit of a firm’s proposal to the client’s specific needs), in addition to simply comparing matter proposals. While there are risks associated with being overly aggressive in the implementation of such auctions, Argopoint has facilitated the successful use of such auctions for significant, high-stakes litigation. A strategic approach to the firm evaluation and selection process enables clients to regain control in purchasing legal services.

Leading legal departments are increasingly turning to innovative strategies in selecting and evaluating outside counsel.  Whether trying to reduce outside costs, increase visibility into outside spend patterns, or streamline evaluation times, firms have reported significant benefits associated with utilizing competitive events for legal services. 

Each legal department is a unique entity with specific sourcing needs and challenges.  Keeping the inherent differences each legal department in mind, Argopoint utilizes a tailored approach to meet our clients’ diverse needs.  

Argopoint provide clients with proven quantitative and analytical techniques, but we recognize that numbers and statistics never tell the whole story in the legal context.   A robust top-to-bottom assessment of every client’s specific situation and environment is key to reach a solution. 

Even in this changing legal environment, Argopoint's clients stay at the forefront of corporate innovation. We founded Argopoint to meet this unfilled, but nonetheless real, need articulated by our core clients: providing top corporate legal departments with innovative management strategies to run large, challenging professional infrastructures that were under pressure to deliver results and increased economic efficiency. Our mission is to improve the effectiveness of even the most capable legal organizations.

Our clients depend on us to provide highly innovative, effective and industry-leading results. We combine evidence-based analytics with in-depth industry experience to deliver solutions that can be executed to achieve measurable, timely impact. Though we pride ourselves on our proven quantitative and analytical techniques, we recognize that numbers and statistics never tell the whole story in the legal context. We perform a robust top-to-bottom assessment of every client’s specific situation and environment to reach a solution supported by facts, data and industry insight.

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Original article by

Patrick G. Lee