Fortune 500 companies have seen overwhelming success with the new outside counsel auctions in place, with the companies reducing legal spend by tens of millions of dollars.
Competitive Bidding for Outside Counsel: Law Firm Reverse Auctions
By J. McMahon
Competitive bidding is catching on in a growing number of legal departments. More companies and the firms they work with jumping on the reverse-auction bandwagon.
50 legal departments have gotten on board with the trend, including Bayer, Johnson & Johnson and Home Depot.
When legal departments use competitive bidding, also called a “reverse auction,” they solicit proposals for outside legal services through a digital auction. This takes the place of traditional requests for proposals (RFPs), which have also been accompanied by a kind of “courting” process between the company and the firm.
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.
The legal environment, with its constantly changing components and variables, may seem like an area where it is difficult to quantify activity and results. Corporate legal departments often have numerous offices in various geographies, a number of divisions, and non-standardized processes for matters—all making legal data collection, analysis, and comparison very challenging. Competitive events can collect, distill, and turn this data into power for corporate clients.
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.
At Argopoint, we offer corporate legal departments the frameworks, processes, models, and training that are necessary to properly design and execute a Competitive Law Firm Event.