By Ronald Hedley
In his 2018 article entitled 10 Things You Need to Know as In-House Counsel, Sterling Miller ofers compelling evidence to in-house lawyers, supporting his assertion that they (legal) should work with procurement professionals to better serve the needs of their clients, the legal department, and the business(es) they represent. Miller begins his thesis with the following definition of legal procurement:
Legal procurement focuses on buying legal services and managing the business side of relationships with law firms and other legal services providers. Buying and negotiations is their forté. They are based in the procurement department and report to the chief procurement officer. The majority of legal procurement professionals have a business/finance background rather than a legal background.”
The above quote is from Silvia Hodges Silverstein, the founder and CEO of Buying Legal Council, which is the international trade organization for legal procurement. Recently, I had the privilege of interviewing her.
My conversation with Silverstein likewise centered on legal procurement, but, unlike Miller, who speaks in his article to in-house lawyers, Silverstein speaks truth to procurement professionals. Her message is clear: “Get involved in the legal category!”
Silverstein is adamant about procurement professionals venturing into the final frontier of organizational procurement. She added, “What are you waiting for? If not you, who? If not now, when? [You] need to reach out to the CEO or the CFO and get to know their in-house counsel and see how [procurement] can help [legal]. This is an opportunity.”
”In this world, you only get what you grab for.—Giovanni Boccaccio
The Meaning of Life
During our interview, Silverstein was fending off the loving caresses (and bites) of her newly adopted family member, a German shepherd-Husky-Chow Chow-pariah-blend puppy named Rose.
When the Silverstein family adopted Rose from the Humane Society, they were not only gaining a loving family member, they were contributing to humanity, or, if you will, caninity. According to the Humane Society of the United States, “Each year, it is estimated that more than one million adoptable dogs and cats are euthanized in the United States, simply because too many pets come into shelters and too few people consider adoption when looking for a pet.” The website continues, “The number of euthanized animals could be reduced dramatically if more people adopted pets instead of buying them. When you adopt, you save a loving animal by making them part of your family and up shelter space for another animal who might desperately need it. When you adopt, you can also feel proud about helping an animal in need. [When you adopt] you’ll change a homeless animal’s whole world.” (“Top Reasons to Adopt a Pet”. The Humane Society of the United States. 2020) Raising a puppy and starting one’s own company share remarkable similarities. Both endeavors require discipline, patience, and diligence. And both have potential long-term positives. Raising a puppy like Rose in a loving environment will provide lifetime companionship. Running a company like Buying Legal Council can change the world by educating others and by helping them realize their potential.
Raising Buying Legal Council
Silverstein began this adoption process in 2002. At the time, she was living in Italy and working for a law firm that specialized in marketing. When she asked her managing partner about their client’s buying practices, Silverstein discovered that there was no research on the topic. She described her next step: “I went to [the managing partner] and said, ‘I want to do research on how clients make purchasing decisions in Europe.’”
Silverstein’s managing partner thought her idea had possibilities and gave her the go-ahead. Silverstein described her next step: “In 2003, I researched how [law firm] clients in the UK, France, Germany and Italy make purchasing decisions. To my knowledge, that was the first research ever [conducted] on that topic in Europe.”
Silverstein then shared how she took her research one step further: “I wrote my PhD on purchasing decisions and legal services at Nottingham Law School. I finished in 2009, and I have been teaching at law schools and writing about it ever since. I have been teaching at Columbia Law School and Fordham Law School. I [also] lecture at Harvard.”
Silverstein then connected her research to procurement. She recalled, “In 2010, I was at a legal technology conference, and I met with business clients from procurement. Up until then, I had never spoken to people from procurement. They were aliens to me. I had only spoken with GCs (General Councils), CFOs, and HR directors for employment law services.”
She added, “It was very interesting to hear that procurement might get involved in buying legal services. I found it so fascinating that I wanted to write a series of case studies on how [to source] legal services.”
And write case studies she did. Of the experience, Silverstein said, “I reached out to other companies and [found] that more and more procurement people were interested in the legal category. I started some informal get-togethers. At that time, I still had my main job as the director of research at a legal analytics company.”
In September 2014, Silverstein launched her new company. She explained, “We had our very first official meeting under the banner Buying Legal Council. We have been focusing on educating procurement people about legal ever since. We show them the best practices of how to buy legal services. We teach [procurement professionals] how to be successful.”
Educating Procurement to Benefit Legal
Silverstein loves helping others, be it human or otherwise. Her company reflects her altruistic values. “Our goal is to educate people. We believe that when you understand, you become a better, smarter buyer of legal services and legal technology. You can be more valuable to a company that you work for because you [bring] value to your employer,” she said.
According to Silverstein, if legal procurement is going to add value, then procurement professionals need to be proactive. “The main drive of bringing in procurement [to work with legal] is managing cost, reducing supplier spending, and making sure that the company buys goods and services in compliance with company policies. That is something that is important to procurement,” she explained.
And Silverstein knows that companies can no longer accept a legal department that is not cost-effective. She said, “We make sure that the company gets the right products and services from reputable suppliers. [Procurement people are expert] in making good auditable decisions: showing objective comparisons, benchmarking the different providers, and in making sure that the best one is chosen.”
Silverstein added, “Procurement professionals are proficient in streamlining operations and defining efficiencies. Because of procurement’s push to [add value], their priority is to get Alternative Fee Arrangements.”
She then offered an example: “You don’t want the law firm you have hired to be paid [based] on how many hours they are on the job. Your interest and their interest [need to be] aligned. The longer the lawyer takes, and the more inefficient he is, the more money you owe them. Procurement [prefers] fixed fees or flat fees to bring more transparency to the table.”
What Legal Procurement Looks Like Today
Change is rarely easy, especially when it comes to legal accepting the help of procurement. In fact, sometimes change can be downright dangerous. Silverstein recalled an unpleasant incident: “10 years ago, when procurement was just dipping its toes into the legal category, there was a lot of [pushback]. In 2011, I was talking about procurement getting involved in buying legal services at a conference in New York. I almost got booed off the stage.” Perhaps Silverstein should have worn a helmet. “No one threw a tomato at me, but I felt one was coming. These partners from the law firms were saying, ‘How dare I say that they should be reduced to [working with people] that buy toilet paper, paper clips, and widgets,’” she recalled.
Things look differently now. Silverstein said, “In the past, the legal department was helping procurement with their contracts. Now procurement works with legal to help them make smarter purchases for the services that they need. Procurement professionals who are in charge of legal services [know what they are doing]. They are very humble and [take the time to] learn what is different with legal. They may have bought management consulting services, or tax advisory services, or engineering services in the past, so they have [expertise].”
”We are not going in circles, we are going upwards. The path is spiral; we have already climbed many steps.- Hermann Hesse, from Siddhartha
Silverstein’s final two points focused on budget and transparency. “There is a lot of money left on the table if procurement doesn’t get involved. It’s typically a top management mandate from the CEO, or CFO after they cut RND and other budgets. Top management sees the legal budget and don’t necessarily know if the numbers [are accurate],” she said.
And procurement brings transparency to legal. “Until procurement gets involved, there isn’t [transparency]. There is often rogue or maverick spend because different business units might be hiring lawyers. Many companies—very large companies, very relevant companies—don’t know the number of everything spent on legal,” Silverstein said.
Despite her success, or perhaps as an attribute of it, Silverstein sometimes wonders if she is contributing enough to the world: “I guess in my midlife crisis, I’m looking for a deeper meaning.” Has she done enough to make the world a better place? Does she need to do more? Her work on women’s equality in the workplace is important, and she has adopted Rose, but, I think Silverstein’s colleagues said it best when they told her, “You’re a bridge between the legal community and the procurement community,” and “You’re such a thought leader.” For now, their truths will have to suffice.
For further information on legal procurement, you may want to read The Legal Procurement Handbook by Silvia Hodges Silverstein.