Companies cut legal costs with 'competitive bidding' process

July 31, 2012 Companies looking to save money on outside legal advice are adopting a process of competitive bidding, whereby they solicit proposals for legal services via digital auction and choose the candidate that offers the best value for money.

GlaxoSmithKline has been conducting this ‘reverse auction’ process since 2008 under the guidance of counsel Bob Harchut, and has thereby reduced its legal spend by tens of millions of dollars, with 68 per cent of its legal budget going toward value-based fee arrangements. 

A recent report, "Speaking Different Languages: Alternative Fee Arrangements for Law Firms and Legal Departments," by ALM Legal Intelligence in conjunction with LexisNexis confirms that an increasing number of companies and firms are using similar procedures, with 20 per cent of respondent companies indicating that they had instituted competitive bidding on high-volume and repetitive legal work; and 36 per cent of respondent firms saying that they had been asked to participate in such a bidding process. 


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