How procurement and legal can optimise their collaboration

“Savings” is the headline number everyone wants - and the number most likely to be disputed. In legal spend, the baseline is tricky: some work is discretionary, some is unavoidable, and a single high-stakes matter can dwarf a year of incremental improvements elsewhere.

Before diving into performance discussions, let's first align on the measurement approach. Are we looking at discounts we've agreed upon compared to standard rates? Budget against actuals? Savings from reduced rework, quicker cycle times, or fewer external hours? Or perhaps the total spend year over year? Each method is valid but combining them can lead to confusion.

A practical approach is to separate controllable levers (scope, staffing, fee structure, process) from uncontrollable drivers (case volume, regulatory events, one-off “all-hands” disputes). Then define a portfolio baseline that adjusts for volume and complexity, not just last year’s invoices.

Quick checklist for a credible savings metric:

• Pick one primary metric and a small set of supporting metrics (don’t rotate definitions mid-year).
• Define the baseline: historic spend, budget, benchmark rates, or an agreed “should-cost” model.
• Separate routine, run-rate work from exceptional matters and measure them differently.
• Track outcomes alongside costs (predictability, cycle time, quality, risk).

Alternative fee arrangements (AFAs) are often described as the path to predictability. In practice, they only work when the work is well defined. For straightforward, repeatable matters, this is easy. For anything complex, it requires disciplined scoping and a budget that both the business and the firm can stand behind.

The shift that unlocks results is to scope the portfolio, not only individual matters. That means describing work in terms of specialisation, expected volumes, complexity tiers, jurisdictions, and the staffing profile you expect to see. Once you can describe the work, you can source it: you can run an RFP that asks firms to price comparable bundles, propose staffing models, and put meaningful incentives on efficiency and outcomes.

Without portfolio scoping, AFAs tend to be confined to routine tasks. Over time, sourcing programs then drift back toward hourly-based negotiations - and the biggest savings opportunities stall.

Many organisations have e-billing and matter management tools that are excellent at compliance: they flag unauthorised tasks, incorrect rates, or non-approved timekeepers. That’s necessary, but it’s not sufficient.

To improve sourcing decisions, you need data that explains why one matter costs more than another. That means capturing complexity, phase-level effort, staffing mix, and practice patterns. It also means being able to compare firms on more than headline hourly rates: how do they staff similar work, how much senior time is used, what is outsourced, and where do costs spike?

The good news is that most systems can be adapted. The limiting factor is usually governance: required fields, consistent taxonomy, and a habit of using the analysis to change behaviour (pricing, panel design, and matter planning).

Even well-run panel programs often leave a gap: the selection of firms for sensitive transactions, major disputes, and regulatory issues can be driven by relationships, legacy expertise, or urgency. Sometimes that’s appropriate. But when these matters sit outside the governance model, they can erase the gains made everywhere else.

You don’t need to “procure” every critical decision. You do need a framework: who is eligible, how conflicts are managed, what pricing guardrails apply, and how the matter will be scoped and monitored. The goal is not to slow down urgent work - it’s to prevent exceptions from becoming the default.

At minimum, incorporate high-stakes categories into your panel strategy, maintain an approved shortlist, and set expectations for early budgets, phase plans, and pricing options that go beyond open-ended hourly fees.

Legal sourcing works best when it is treated as a management discipline, not a one-time negotiation. If you align on how you measure value, scope work rigorously enough to price it, capture data that explains drivers of cost, and apply governance to the matters that matter most, you’ll create a program that keeps improving - even as the portfolio changes.