Silvia Hodges Silverstein
Executive Director, Buying Legal Council
Columbia Law School, Lecturer
Pamela: Hi my name is Pamela DeNeuve and welcome to “Lawyer of the Week.”
This week I’m very pleased to have our guest Dr. Silvia Hodges Silverstein. Let me tell you a little bit about Dr. Silverstein. She is the Executive Director of the Buying Legal Council, the international trade organization for legal procurement and Adjunct Professor at Columbia Law School and Fordham Law School.
Silvia co-authored the Harvard Business School case studies, “GlaxoSmithKline: Sourcing Complex Professional Services,” and “Riverview Law: Applying Business Sense to the Legal Market” and authored the law review articles, “I Didn’t Go to Law School to Become a Sales Person” — it’s great — “What we Know and Need to Know about Legal Procurement.” She is also the editor of “The Legal Procurement” handbook and publisher of “Winning Proposals: The Essential Guide for Law Firms and Legal Services Providers.”
Pamela: Welcome Silvia.
Silvia: Thank you so much for having me today Pamela.
Pamela: Yes, very glad to have you. I’d like to go ahead and ask you our Lawyer of the Week question. And my first question is how did you get interested in procurement?
Silvia: I initially worked on a law firm side, I was actually working in Italy and on the European continent as a law firm marketing manager. And my thinking was that I really need to understand what clients really wanted. So in order to really do a good job I needed to find out what moves them, what kept them up at night. And I couldn’t find any research on the European Continental purchases.
So I started to research purchasing behavior over 10 years ago and I’ve been doing it since. So I’ve spoken with many in-house counsel. I spoke with Chief Financial Officers. I spoke with HR directors for employment law. I spoke with CEOs of medium sized companies. So anybody really who was involved in purchasing legal services, I researched them and one trade point or another.
Then around 2010 I discovered legal procurement being involved in the sourcing of legal services and I felt like — procurement, I didn’t know that they bought legal services? So I researched it in more detail and I actually started small ad hoc get togethers of the people that I had met at this point. And I connected with them and I connected them and we basically shared experiences and best practices and so on.
At that point in time… So I’d long since left actually the law firm marketing side and started to teach full time for a while. But at that point in time people then asked me — “so when is our next meeting?” I’m like, well I’ve got a lot of stuff to do. But in September of 2014 we started Buying Legal Council with our first meeting. Now the Buying Legal Council has bloomed into a global trade association for those tasked with sourcing legal services and managing supplier relationships.
We actually just celebrated our third birthday. So we’re very very proud of that. And you know in general our members are typically procurement professionals of large companies of Fortune 500 companies as well as the international equivalence, with members from North America, Europe, Middle East, Australia, Asia Pacific as well as Latin America.
Pretty much everything we do Pamela is about networking or education. So our goal really is to make legal procurement professionals more sophisticated buyers of legal services.
So from monthly conference calls for our members on legal procurement topics to quarterly calls for our friends on the law firm or legal service provider side, we try to educate them. And we try to educate and network them at our legal procurement conferences that we have really around the world now.
I mean naively or not, the focus is on a win win, in a constructive useful dialogue between the buyers and the sellers of legal services. You might know that Pamela procurement is typically seen as or legal as a category as procurement would call it, is seen as the last frontier – something very challenging, if not intimidating.
But in the last five to six years, we’ve seen that more and more general counsel and their legal departments now are assisted or supported by procurement. The corporate function responsible for acquiring goods and services is now really quickly gaining importance in legal, really around the world.
Pamela: OK. You’ve said a lot Silvia, so I’m going to back up a little bit, so that our audience can follow the whole journey here that you have done.
So my first question is how long did it take you, all the research that you did to actually come up all the way to coming up with developing the Legal Procurement Council? How many years was that?
Silvia: Yes, so as I said I personally discovered procurement being involved the first time in 2010 and then later I was asked by the ABA, by the Commission on the Future of Legal Services to actually write about the history of procurement. You know, the what we know and need to know about about legal procurement. I discovered that there were some first attempts in the late 1990s actually here in the US and then in the early 2000s it was some banks in London who tried to bring in procurement.
And in the beginning that wasn’t necessarily that successful because the legal departments themselves and also the law firms were very resistant and were not open at all to the idea of bringing in procurement.
So then basically until the downturn of the economy in 2008/2009 that was then a catalyst really Pamela, to then bring in procurement because then suddenly people did care about cost savings. The CEOs and CFOs went to the GC and said — we cut everybody else’s budget you can no longer be an exception. And is when procurement became more prominent and it was typically in areas or industries such as banking, insurances, also in pharmaceuticals. So pretty much in other highly regulated industry.
So those who had large legal spend, those were the ones where legal outside counsel spend reached such a level that the CEOs and CFOs and the corporations no longer could say — oh legal, you are exempt from let’s say the more professional procurement of of your services that you buy.
Pamela: So could you describe the process? So if someone didn’t know what procurement is, how does it start? Starting from the firm or the organization deciding that they would want to have procurement. How does that start?
Silvia: Yes. So as I said you know the corporate legal services used to be more or less exempt from the costs scrutiny that pretty much every department including R&D was facing that that went on for years.
But then you know in 2008, as I said the financial crisis and publicity about billing practices, big ticket spending and at one point it was all over the news that hourly rates of lawyers reached a thousand dollars an hour and went beyond. This increased transparency and as I said the profit pressure on the client side that was really at the root of this
So what it is that procurement does is one of the first steps is really to understand exactly how much is the client spending. So worldwide and typically I mean there are exceptions but typically until procurement comes in and starts to apply it’s normal procurement approach to the legal category of course in a modified way. But really it is about bringing the processes that procurement uses in other areas as well.
They will try to understand exactly how much the corporation is spend… Or the government body, we actually have members that are government bodies as well. So they will go in and try to understand how much are we actually spending. Because in procurement It’s called “Mavericks spend” — so, who is just going out and hires law firms without there being any agreements.
Once they have a grasp on that they will start to analyze. They will see how much are we spending with which firm and shall we maybe reduce the number of suppliers or law firms here that we work with so that we can actually manage it better. That we can actually have more negotiation power, that we actually have a chance to partner with the providers with the law firms.
Because we’ve done a research 2017, we’re starting to get the process for the 2018 research now on legal procurement and basically we found that the average number… Maybe I should let you take a guess what you think the average number is? But a large corporation on average works with several hundreds of law firms. There is just no way to really manage such a large number of law firms.
Pamela: So what would you say are your biggest challenges then, as as you try to help law firms understand and actually quantify how much they’re spending for their legal dollars and I imagine to try to help them to get their best I guess bang for their buck? But the best amount of services for the dollars that they’re spending.
Silvia: So I think there’s a lot of… And one of the big challenge and that’s probably true for both the client side as well as a law firm side is really that you start to look at legal in a more quantifiable way. That you use the tools and techniques or technology that’s out today from eBilling and data analytics that’s possible today, so that you’re really looking for trying to get a grasp on what it is that you’re spending. And understand why you’re spending with whom and etc., and so forth.
So that’s that’s a big challenge to really bring that kind of more quantitative view into into the legal profession. So I would say that’s a big challenge and with…
Pamela: What are your biggest wins would you say?
Silvia: My personal wins? Or… Well so…
Pamela: Your wins for the…
Silvia: The organizations?
Silvia: Yes. So for the Buying Legal Council we’ve been growing in double digits since our inception only three years ago and we’re drawing more and more people each year. And for me always the happiest moment is when our members renew their memberships, because you want to have happy members who want to be part of this.
So we’re really seeing now that more and more corporations around the world are really bringing in their procurement people, even if there might be initial resistance, particularly from the legal departments where they are like — we can do it by ourselves, thank you very much.
But I think it makes a lot of sense if the in-house lawyers focus on lawyering, if the legal department managers, legal operations focuses on managing the legal department and the legal procurement people focus on what they do best, to really help source the best providers for the right price and then manage the relationship.
That’s really what procurement is about. And quite frankly Pamela what we are trying to do is to educate them so that they don’t just look for larger and larger discounts. We’re really trying for them to look at a more holistic way to really look at the service delivery and all that.
So, we’re making them more sophisticated, but hopefully they are going to be better partners to the provider side.
Pamela: Well what legacy would you like to leave with regard to the Buying Legal Council?
Silvia: Legacy is a big word. But, I mean we see the Buying Legal Council really as the advocate for legal procurement the profession and the professionals.
So I’d like to see the legal industry to really reach a new level of effectiveness and efficiency. And we aim to make our members as I said, better, more sophisticated buyers and try to support them in any way we can.
A few years ago legal procurement was such a new thing and now we have procurement veterans that have done a lot of work and really reached already new best practices.
So we aim to see ourselves be their professional home base and the safe haven where they can exchange methods and best practices, to really learn from each other and learn from analogue industries. Because there’s a lot of good stuff out there and we just need to start to put that in practice, implement it.
Pamela: So if someone was interested in learning more about the Buying Legal Council, how would they begin?
Silvia: Visit our Web site — buyinglegal.com and poke around a little bit. A lot of the material is freely visible, other stuff we have behind password protected area for our members. We have members and we have friends. So the members are at those on the buying side and the friends are those on the provider side.
And yes, as I said we’re really trying to get them to have a positive dialogue, because only with that I believe we can have good outcomes.
Pamela: Yes, it’s really wonderful that you were able to do that research and to see that there was a need and then to actually get together an organization that’s benefiting both the law firms as well as the corporations and banks and other institutions.
So I’m I’m sure you have to feel really good about what you have begun which just started really as research? Excellent, excellent job.
Silvia: Thank you, thank you Pamela.
Pamela: So who would be… Probably… We’ve talked a little bit about some of the organizations, who would be companies or corporations who might be interested in procurement?
Silvia: So as I said typically it’s the corporations that have large legal spend. Hard to quantify large but I would say maybe double digits of millions of US dollars around the world. Those are typically the ones who bring in someone in procurement. And that might be somebody who sources other professional services such as management consulting or financial services or similar things.
So it’s not, typically I hear the — “oh those people get involved who normally buy pencils.” It’s like, no come on, no. There’s nothing wrong with buying pencils, but, it’s typically procurement professionals who really have worked in other areas and other professional services so they know it’s not just about buying widgets, but there is something to be known about the specialties about legal services.
Actually because a lot of our members are business people rather than lawyers we’re starting in January of 2018 we’ll start what we call legal lessons. Sort of like many Law School sessions. So on like anatomy of a merger, or phases of a litigation etc., and so forth. So we will have these lessons so that people really understand what the ins and outs of legal services are, without necessarily having to go to law school.
Pamela: That’s great. So I’m one of the things is that, just recently the National Taskforce for Lawyer Well-Being has put out some information. What do you think is it important for lawyers or any professional to relieve their stress?
Silvia: Yes that’s definitely a very important topic. So the way I manage stress is by trying not to take myself too seriously. But what I do is I take my work very seriously. But I do a lot of yoga and I love walking in nature. So that works for me. I think you just need to find your own place of peacefulness and where you can just really forget about everything and just relax.
Pamela: Wonderful. Well it sounds like 2018 is going to be a big year for the Buying Legal Council. I noticed it that you have big meetings and so forth throughout the year and it seems like the enthusiasm and everything keeps…
Silvia: It’s there, yes absolutely, absolutely. Well, it’s good to really see people growing in this profession and really being excited about it. Because procurement professionals often feel like nobody likes them, because you are the one who cuts everybody else’s budgets. But we are a group, we want to do better, we want to work well together and I think that makes a difference.
Pamela: It’s a great contribution. Well thank you so much for being our guest on Lawyer of Week.
Silvia: Thank you very much for having me, appreciate it.
Pamela: Thank you.
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