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Reverse auctions make law firms nervous

Legal departments continue to find new ways to reduce outside counsel spend

Although it seems as if the subject has been absolutely exhausted since the downturn of the economy in 2008 (and some may argue even before), the idea of alternative fee arrangements, prompted by legal departments’ needs to cut costs, are still top of mind for corporate in-house counsel.

Yesterday, the Wall Street Journal published a story called “Pricing Tactic Spooks Lawyers.” The article discusses the reversed auction process—yet another way companies are putting pressure on their law firms to give them the best possible deal on work—and the controversy surrounding it.

The way it works is a client will pit multiple firms against each other in an online chat room where they bid anonymously on various types of legal services. Companies such as GlaxoSmithKline, eBay and Toyota have all used the new method to obtain legal services, and it’s making some law firms very nervous.

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Cathleen Flahardy

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