General counsel and/or company secretaries, regardless of the size of their organisation, will almost inevitably need to engage legal services providers at some point. The engagement process for doing this will vary from formal panel based engagements in large institutions, corporates and government, to one off adhoc engagements in small to medium enterprises.

Regardless of the nature and scope of a particular engagement, there are some basic leading practice principles and processes that in-house lawyers should apply to ensure their organisation is obtaining value for money from external legal services providers.

Structural changes in the legal industry including deregulation, expanding technologies and increasing availability and popularity of LPOs have transformed the industry into a legal services buyer’s market, further empowering general counsels to demand changes such as greater efficiency and investment in technology from external legal providers. With the balance of power lying with legal departments, there is now greater capacity for them to disaggregate legal matters, opening up further opportunities for alternative service providers and enabling them to drive significant change within law firms, especially with regard to litigation services.

In-house lawyers need to be aware of the full range of external legal services available to meet legal needs, including legal process outsourcing and contract/secondment lawyers, in order to ensure that their organisation is realising optimum value for its legal spend. The purpose of this topic is to provide an introduction to these principles and processes.

This guidance note sets out the ideal level of knowledge and skills for procurers of external legal services, and sets out a leading practice approach to external legal services procurement.

The effectiveness of any approach to procurement will be dependent on the training and skills of the procurer. The leading practice approach set out in this guidance note is underpinned by appropriate training of in-house legal staff on how to procure and manage the full range of external legal services providers, including training informed purchaser principles and legal project management.

The leading practice approach involves the training of legal services procurers to understand procurement procedures implemented within the organisation, as part of that organisation’s overall approach to procurement.

The guidance note introduces a six step leading practice approach to procurement of external legal services that can be applied to panel or non-panel based procurement.

See Keeping informed and in control of external legal services providers.

This guidance note sets out each step of the Leading Practice Approach to Procurement of External Legal Services.

The stages involved are:

• define legal services needs;

• determine appropriate mix of internal and external legal resources;

• select external legal services;

• manage provider relationships;

• information sharing; and

• measure, monitor and refine.

See Stages in the leading practice approach for procurement of external legal services.

While traditionally in-house lawyers have only had the choice of using internal resources or an external law firm to meet their organisation’s legal needs, more innovative options are emerging in the Australian market.

An increasing number of legal process outsourcing providers have entered the Australian market, and can often be used to more effectively address high volume or process driven legal needs.

Technology solutions offered by legal process outsourcing providers pose efficiencies for organisations not only in the conduct of legal or related work, but in the management of their legal services. For instance, e-billing software solutions that analyse and report on law firm invoices.

Another emerging alternative is the option to bring contract/secondment lawyers into the organisation to meet short-term legal needs.

See Alternative legal services providers.