Legal Panel Process

A recent EY survey of General Counsels found that 2 out of the 5 most common areas identified as offering potential opportunities for cost savings in relation to legal support for companies were:

• Negotiating better rates; and
• Using fewer providers.

As a result, it is no wonder that companies are running more legal panel exercises to appoint a specific number of legal service providers than ever before.

At Lex Stratum, our team has been involved in panel tenders from the buyer perspective (either as the in-house legal team or as non-lawyer directors) and as private practice lawyers pitching to clients. In this article we set out our top 5 things that we would recommend all parties take into account when running a successful legal panel tender process.

1. Identify why you are running the tender exercise

What problem(s) are you trying to solve by creating and/or reviewing your legal panel? How is this measured and do you have the baseline data to be able to compare both the tender submissions and track the success of the panel throughout its duration?

Legal panels and tender exercises can be great, however in our experience to be truly successful the client needs to invest in the preparation phase. As part of this preparation phase, the client should critically review their bottlenecks and pain points and clearly identify these in their RFP packs.

Also, we would advocate for moving away from a simple comparison of hourly rates and deeming a successful outcome of a panel tender being a reduction in the hourly rate. Whilst this may be a valid aspect, it is only a single aspect of the value that can be created by a successful panel.

2. Transparency

When preparing the RFP pack for a legal panel tender, include enough information to allow those submitting proposals to identify the areas that would actually create value. This could be:

• Providing a ball park on the expected / historic legal spend (e.g. there is a fundamental difference in approach and required resources if the expected legal spend is £10,000 compared to £10,000,000).
• Identifying areas that could benefit from economies of scale (e.g. could a bidder leverage existing investments in technology or infrastructure for the benefit of the client).
• Explaining current pain points / why you are running the tender and what you want to achieve.

3. Adopt procurement methodologies

We know that procuring legal services is not the same as procuring pens and we are not suggesting that it should be treated the same! However, there are procurement methodologies that we have seen drive better outcomes in the context of legal panels. These include:

• Preparing agreed assessment criteria and weighting at the outset to avoid (unconscious) bias.
• Adopting a 2-phase assessment approach: firstly, review against the agreed mandatory requirements; and secondly, for those that have met the mandatory requirements, complete a commercial review focused on pricing and value.
• Involve more than 1 person in the assessment phase – ideally a subject matter expert (e.g. the General Counsel) and a process expert (e.g. procurement team) – to create a check and balance during the assessment phase.

4. Be prescriptive where appropriate

Legal panel processes are time consuming for all those involved. Where appropriate the process can be streamlined and managed efficiently by being prescriptive. For example:

• Set out a timeline for the tender process, which all parties should commit to respecting.
• Agree how certain information will be provided (e.g. this could be an agreed form of spreadsheet for pricing to facilitate efficient comparison or a central area for bidders to raise questions that all bidders can benefit from).
• Set specific examples / scenarios if you want to move away from hourly rates (e.g. if you regularly require commercial real estate work, include an example scenario with common variables specified that bidders can provide indicative pricing for).

5. Give room for innovation

One of the benefits of being in private practice is that you are likely to be exposed to a wider variety of approaches and solutions than can be achieved in-house. The panel tender process gives the opportunity and forum for legal service providers and potential clients to explore new ways of working and creating / implementing solutions. However, to facilitate this, the panel tender process needs to dedicate time and space for this type of innovation and all parties need to engage in the conversation.

At Lex Stratum, our team has been involved on all sides of panel tenders. We have distilled this experience into the above top 5 things we would recommend.

If you would like to know more, we also have a consultancy service where we can go into more detail if you are planning on running a legal panel tender or, alternatively, we have established our own legal panel that harnesses the buying power of our clients with a pre-approved set of specialist external law firms.

Further reading:

https://www.ey.com/en_uk/law/general-counsel-imperative-barriers-building-blocks