A Structured Three-Phase Approach to Vendor Management

At their ELM Solutions peer forum in Houston last month, Wolters Kluwer brought together legal ops professionals in the energy sector to discuss strategies for effective vendor management. Jennifer McIver reports on insights from the forum on building a structured three-phase approach to vendor management: engage, enforce, and examine. 

The engagement phase involves tailoring the outside counsel selection process to align with the organization’s business needs, culture, and scalability. Common strategies include independent outside counsel selection, preferred provider programs, requests for proposals, strategic pricing models, and alternative fee arrangements. 

Legal teams perceive relationship-driven engagement and the use of technology differently than they do the need for cost control. The 2024 Blickstein LDO Survey reported that 85% of legal teams engage with relationship partners rather than law firm pricing professionals. Working with pricing professionals, however, promotes cost efficiency, while technology tools can integrate pricing data directly into an enterprise legal management system.

The enforcement phase ensures compliance with established policies to maintain cost control and accountability. Legal ops professionals must actively manage outside counsel guidelines, rate structures, budgets, and AFAs. Technology solutions facilitate this process by automating compliance tracking, improving law firm collaboration, and delivering cost savings.

The examination phase focuses on leveraging data for continuous improvement. Legal ops professionals can optimize vendor management by analyzing historical invoicing trends, industry benchmarks, and outside counsel performance metrics. 

A structured three-phase approach to vendor management is an ongoing cycle of engagement, enforcement, and examination. These insights from the Wolters Kluwer ELM Solutions Houston forum provide crucial information that legal ops can use to make decisions about their outside counsel investments.