I recently read Tom Bangay’s blog post on how the UK arm of international energy company E.ON reduced its pool of external legal advisors from around 40 to just one: Pinsent Masons. The post highlights four key themes that will resonate with businesses.
Transparent pricing simplifies decision-making
Pinsents created an online menu that included everything that E.ON might outsource, from a standard form non-disclosure agreement all the way through to the suites of documents that go into building a wind farm. There was considerable investment in the negotiation of price upfront, but after that initial investment, a process that used to take a couple of days, and probably about 25 lawyer hours, now takes just five minutes.
Fair fixed fees are achievable, and provide certainty on all sides
With fixed fees, it’s in both parties’ interests for the legal expertise and resource to be used as efficiently as possible. Pinsents’ online system included a menu of fixed prices that provides absolute certainty on fees. Each phase of a task has a price, and that price is to be the fair average, with the objective of reducing many of the difficulties that can pollute a client-lawyer relationship around fees.
Data demonstrates value
The online system produces a report every few months that enables E.ON’s Head of Legal to identify the business units that are spending the majority of the value points. The legal team can then focus on these high-spending areas and identify if there is a smarter, more cost-effective way of working.
Procurement teams continue to grow in influence
Procurement teams are increasingly driving purchasing decisions, and legal services providers have to adapt. E.ON’s procurement rules meant that for every spend above £10,000, the legal team had to get a minimum of three providers in to bid for the work, which led to the team spending disproportionate time on beauty parades.