While there are many areas of a legal department that typically fall within the scope of responsibilities of the head of legal department operations (LDO), almost none impact the legal department’s finances as profoundly as outside counsel spend and legal vendor management. In fact, most law departments spend more than 60 percent of their budgets on outside counsel and legal vendors. Efforts encompassing outside counsel and legal vendor management may involve the identification, selection, utilization, measurement, or some other aspect of a legal department’s law firms and other vendors. Optimizing outside counsel and legal vendor management only results when the general counsel and LDO make productive changes to the internal and external relationships that consist of the right mix of in-house professionals, outside counsel and clients.
Talking from experience and with decades of collective experience in building and managing outside counsel and legal vendor management programs, we have experimented with many types of approaches to managing outside counsel and legal vendors. We have had many successes, and a few efforts that were less successful. But after all of these years and through all of these efforts, we have several observations that are important to consider when building world-class outside counsel and legal vendor management programs.