As corporate legal departments face increasing pressure to optimize their operations, the need for a mature and effective vendor management program has never been more critical. During Wolters Kluwer’s ELM Amplify 2024 user conference, at a session entitled “Paving the Path to a Mature Vendor Management Program: Collaboration, Selection, and Performance,” a panel of experts shared strategies and insights for building a strong program of outside counsel management. Here's what we learned.
People and relationships: The foundation of success
Building a successful vendor management program starts with people—both internal stakeholders and outside counsel. The necessity of securing buy-in from the internal attorneys who work with vendors cannot be overstated. Programs often succeed or fail based on the willingness of internal teams to embrace change. Clear communication about the purpose and benefits of new initiatives can help attorneys feel included and invested in the process. Change management strategies, including transparent discussions about the impact of these changes, ensure smoother transitions.
Relationships with outside counsel are equally critical. Effective communication is key to managing expectations without jeopardizing trust or increasing risk. Legal departments must clearly articulate their goals and expectations while respecting existing relationships. This balance ensures that changes align with organizational objectives without alienating key partners.
Setting expectations and enforcing standards
Clear expectations and consistent enforcement are essential for effective vendor management. A unified internal front is necessary before implementing actions that might face resistance from vendors. Aligning with leadership ensures that decisions—like reallocating cases or enforcing compliance—are supported at every level. This approach minimizes the risk of conflicting directives, particularly if a firm attempts to escalate concerns with the legal department or company leadership.
While strict adherence to guidelines is vital, there will inevitably be exceptions. Having a well-defined process for handling deviations ensures consistency without damaging relationships. Firms sometimes rely on their historical relationships to seek occasional exceptions to guidelines, but consistent enforcement sends a strong message. Leveraging tools such as billing guideline agreements and automated review processes can streamline compliance while maintaining fairness and transparency.
Effective panels drive performance
Panel selection and firm management strategies are central to robust outside counsel management. Creating effective firm panels involves balancing the need to reduce firm counts with maintaining flexibility. Consolidating firms can enhance buying power but may also increase risk by impacting quality and availability of expertise if not carefully managed. Tools like firm scorecards help decision-makers evaluate firm performance objectively and streamline the selection process.
A successful vendor management program is not static. Continuous evaluation, informed by attorney feedback and firm performance data, ensures the program evolves to meet the organization's needs. While intensive panel refreshes may happen every few years, ongoing feedback collection allows for real-time adjustments.
Efficiency and insights through technology
Modern vendor management requires leveraging technology to reduce inefficiencies and enhance decision-making. Legal departments are increasingly adopting centralized platforms to manage billing, matter tracking, and performance monitoring. Centralization reduces reliance on manual processes and fosters collaboration with outside counsel through shared tools. That technology requires clean, correct data to be used effectively.
Data is the backbone of an effective vendor management program. Accurate, consistent data entry allows legal teams to generate meaningful insights, enabling decisions based on objective metrics rather than gut feelings. Firm scorecards and predictive analytics are particularly valuable for identifying trends and optimizing performance. Many organizations underutilize the technology they already have in place. By taking inventory of existing systems and aligning them with departmental goals, legal teams can unlock hidden efficiencies without necessarily investing in new tools.
These strategies empower corporate legal departments to navigate complex challenges and achieve long-term success with their outside counsel. To hear how one company has established a collaborative and effective vendor management program, listen to our Legal Leaders Exchange podcast episode How DHL is using data, annual reviews, and billing guidelines to tackle rate negotiations.
