The LVN Council of Luminaries is comprised of veteran thought leaders and pioneers in the business of law community. The objective behind assembling this group is to establish a brain trust of recognized, experienced and progressive leaders who can help interpret developments in the market, provide advice on how to successfully approach and navigate challenges, predict future trends and changes to prepare for, and to participate in targeted special projects to benefit the legal industry as a whole.
The below meeting was conducted primarily with the Council Of Luminaries CLIENT-SIDE group.
We started today’s meeting, with a discussion around reverse auctions
Luminary 1 – We were going to do a pilot with JusticeBid.
Luminary 2 – We are doing one next week.
Luminary 3 – For law firms or vendors?
Luminary 2 – This is for firms. But I’d like to do it for vendors, too. Want to use it for our preferred vendor list. For example, it would be useful for support vendors for trial work like e-discovery.
Luminary 1 – Just for rates? Or is it fixed fee project.
Luminary 2 – Fixed fee. This one is immigration work, which lends itself to a fixed fee. We haven’t used auctions much. We acquired a company that was using auctions more. They were using PERSUIT, but we thought JusticeBid was like “Avis.” They try harder, have more hands-on help, and a lower price.
Luminary 4 – We’ve been doing auctions at our company for years. We just had one yesterday for a commercial litigation. There’s no better way to develop a marketplace for a one-of-a-kind matter. It’s transparent. The firms can see if they are high on price. The whole key is developing proper assumptions, so all are on a level playing field. Then you can see what is the market price and which firm is where on that price. On individual matters, we’ve found nothing but success.
Luminary 2 – I’m dealing with this right now. I agree with Luminary 4, but there are still cultural issues. The situation I’m dealing with today is we inherited a matter that had been auctioned through fixed fees, now a new attorney is handling it. She’s much more old school and wants to take a different approach. She has decided that this isn’t really the right firm for this matter. (And she’s probably right.) So we have to lift it up, move it, figure out what we had. There are some challenges there. The firm underbid, so when we’re trying to determine what to give them credit for, it doesn’t quite add up. I think our attorney would say fixed fees and auctions don’t work. But it just goes with the territory. I don’t think this is a reason to throw reverse auctions away. But we’re going to have to negotiate on this.
Luminary 5 – The immigration stuff is it per portfolio?
Luminary 2 – It’s per visa.
Luminary 5 – Luminary 1, have you done anything on IP reverse auctions?
Luminary 1 – We are doing fixed fees for trademark prosecutions, but not reverse auctions.
Luminary 4 – We’ve done reverse auctions on trademark and patent prosecutions, like an a la cart menu. Also, in IP we do reverse auctions for patent litigation. We use Arriba, and by and large it’s ok, though it’s not designed for legal. Justice Bid is. That makes a difference. We are in a good spot because we’ve been doing it for a decade. If I was just starting out, I think a partner like Justice Bid would be a good partner, because they do have the experience, can walk us through the process. And they can walk the firm through, too, but if a firm says they are not familiar with reverse auctions, they are not being honest.
Luminary 6 – How often do the firms get overly competitive and bid too low and end up not serving the matter properly. Like sellers remorse
Luminary 2 – The firm that we are changing from, it’s not really because they underbid. It’s more because the attorney saw a need for a change and the underbid is a complicating factor in separating.
Luminary 4 – Firms have become more disciplined. Pricing professionals help. They set their floor before we start. I tell them to do that. “Set the floor, then work from where you are down to that floor amount, but no lower.” We have not seen a decline in service.
Luminary 1 – You’re not always picking the lowest bidder….
Luminary 4 – We have a scorecard: price is 30%. The other 70% are things like the quality of key impressions, the quality of team, experience, diversity of the team. But with that being said, over the years firms have gotten so good at zeroing in proposals, so often times it comes down to splitting hairs. The best use of auctions, in my opinion, is when the prices end up so close, you can tell the attorney to pick who they want to work with. Price is taken out of the equation because it's all the same.
Luminary 7 – Can your attorneys see other issues besides price? Sometimes we see a big differential in price, especially when the firm thinks it’s not necessary to actually do all the work outlined in the scope.
Luminary 4 – We provide assumptions. Then firms then bid and give us their assumptions. Then we bottom that out. We say, “for the purposes of this bid, we want everyone to assume the following.” So even if they told us we don’t have to do something, was ask them for purposes of the bid to assume we’re doing that.
Luminary 7 – If price is only 30%, we need to make sure they can see the rest.
Luminary 4 – We also ask for them to provide their three major cost drivers. So if we see someone is planning way more for document discovery than the others, we know their assumptions may be out of whack.
Luminary 2 – They may also bid low because they can make it up elsewhere, on other matters
A number of contract management tech providers have taken on massive funding lately. Just last week Ironclad was valued at $2.8 million. Does this make any sense?
Luminary 5 – There is the great shift from eDiscovery to contract management. If you think about the EDRM model. When we implemented contract management, we avoided the end-to-end. It’s all about the workflow and how to bolt them both in. We’ve not had huge success on having a true CLM system going end to end.
You can work across your stakeholders, it can all be done at one time and target who is looking at what part of the document. It can be distributed.
Luminary 3 – The problem was we didn’t even know how many workflows we need, so it would be hard to gauge a price
Luminary 6 – There are really two very different uses. Pre-execution might include up to digital signature and maybe even basic storage. And post-execution, which is what is often referred to as “contract lifecycle management” and includes analysis of what’s in existing contracts. In my opinion, they are very different disciplines.
Luminary 5 – The CLM system was brought in by our procurement team. We in legal are just using it for a repository. A contract goes for review, goes for signature, then uploaded to this system, which is called Jaggaer.
As far as authoring contracts, we don’t have a good system. And on contract review, we are halfway there.
Luminary 2 – Is your legal dept the place that stores contracts for the business?
Luminary 5 – No. It’s a common repository with different “owners.”
Luminary 2 – For us, it’s purchasing.
Luminary 5 – For supply chain that makes sense.
Luminary 5 – Can there be a common system for our paper and other’s paper? They are different. Can there be one platform for both? I’m not so sure.
For the CLM system that’s been brought in by procurement, we are feeding off it, but they are paying for it, so we’re not pushing the envelope too much.
Luminary 3 – We are struggling with that because we have a holding company and we have brands. We are running into “best in class” for procurement, revenue, leases. Then the lawyers say they want a central repository. So we are in the middle of a stakeholder review. I’m increasingly coming to the conclusion that best in class is best then funnel the specifics from the brands in.
Luminary 1 – How does legal own the contracts. We are going with more of a Contract Master Management idea. Where does the template need to be and who owns it?
Luminary 3 – There may not be an ideal solution. You may just have to strap all these together.
Luminary 1 – We all seem to be in the same boat.
Luminary 3 – What about leases. They are in CoStar and the real estate dept likes it. And procurement likes iValua and doesn’t want to move. So it may be that letting each dept pick and then connect them together. It’s all over the map.
Luminary 5 – Our #1 problem was speed/turnaround time. #2 was consistency. Luminary 1?
Luminary 1 – #1 is consistency. #2 is ownership even within our legal team. Multiple people may think they all own the same template. #3 is change management. When we want to make a change to a template, we have no idea where that needs to go. And #4 is like when we divest a business unit. The business asks us to send them all their contracts. We have to respond “they are your contracts. We don’t have them.
Luminary 5 – We’ve had that too. We’ve even had to contact the counterparty. That can be embarrassing.
Luminary 6 – I’m sure we will be talking a whole lot more about contract management in the coming weeks and months.