Legal Briefing

The thick end of the wedge

The In-House Lawyer Logo

TMT | 01 February 2014

LSG supports businesses in more than 70 countries across a variety of industries. The spectrum of industries is wide but common themes prevail when it comes to the procurement of professional services.

In this article LSG considers these themes and, in doing so, flips the classic adage of ‘thin end of the wedge’ to focus on the gains made at the ‘thick end of the wedge’ to highlight the value of strategic technology driven solutions and peer-to-peer invoice compliance services.

LSG argues that by controlling the ‘thin end of the wedge’, significant gains are achieved at the ‘thick end of the wedge’ and this is the real goal here for LSG, and its customers focused on attaining the best value professional services.

From financial services, banking, insurance, mining, oil and gas, pharmaceutical, media and technology among others, LSG partners with global organisations wanting to add value to their procurement of professional services.

To find out how, read on.

E-SOURCING: THE BUYING AND PROCUREMENT WORLD

Procurement affects almost all commercial sectors. Almost anything we consume has been sourced and made available through a complex number of layers within the global supply chain.

The supply chain can begin from the source of raw materials, such as iron ore for steel-making, and end with the opening of a new bridge or tunnel in the case of a large-scale construction project. In the centre of these chains is the crucial management of professional services, suppliers and products.

How much of the supply chain has moved onto an electronic platform varies from industry to industry, but in most cases, products and a growing number of services are being supported by e-sourcing software solutions.

E-sourcing, simply put, is moving from what was once a highly paper-driven process to one or more electronic platforms. How much of the client-supplier/vendor relationship has moved to this procurement model depends on the complexity of the requirements for services and the understanding by businesses of the benefits.

The manufacturing industry, for example, is highly engaged and has been a key player in the development and sophistication of e-sourcing solutions.

PANELPARTNERSHIP

At the start of the e-sourcing process, purchasers must source the most appropriate supplier for their specific requirements.

With a planned launch later this year, PanelPartnership (PP) is a highly secure web-based platform that enables suppliers to register their materials, goods and services and for purchasers to quickly identify, evaluate and connect with the right supplier based on their procurement needs.

Initially with a focus on professional services, PP sign-up will provide a user-id and secure access to the suppliers so that they can:

  • Manage the company profile.
  • Publish and manage products/services catalogues.
  • Update e-mail routing of RFx, e-bidding, purchase orders and invoices.

For the purchaser, value will come from identifying the right supplier quickly and efficiently from a trusted platform. The suppliers may be sourced directly from PP and/or following an e-RFI (request for information) and e-bidding process.

E-RFI AND E-BIDDING

Selecting the most appropriate supplier(s) and/or product(s) to suit the requirement(s) is the first step to satisfying the procurement needs at optimal level.

How this process is managed can be improved with the support of technology. To complement PP, LSG has also built an e-RFI and e-bidding platform whereby pre-approved suppliers can provide detailed information, documents and pricing about themselves and their services in response to an RFI/RFP (request for proposal). This bidding process enables procurement organisations to manage and control the RFI/RFP process and ultimately to select the appropriate supplier(s).

PROCURE-MANAGE-PAY

Following selection, the supply of the service(s) or product(s) can be controlled with approved purchase orders and payment is made at agreed points. This reflects the typical procure-to-pay model adopted by many technology providers.

At LSG, we have enhanced this procure-to-pay model by adding a ‘case/matter/project management’ layer where the delivery of the service facilitates a more ‘hands-on’ approach. This enables our clients to track tasks, milestones and budgets as appropriate: an example being the provision of time and rate-based legal services together with associated expenses.

The procure-manage-pay solution allows our clients to have the ‘best of both worlds’:

  1. service and/or product selection based on appropriate supplier valuation for a fixed fee; and
  2. greater control over time and rate professional spend which typically cannot be predicted so well. It gives accurate ‘line of sight’ across the organisation.

E-BILLING AND INVOICE COMPLIANCE

As part of the solution, electronic billing moves a paper-driven process onto an efficient electronic platform saving time handling paper, storage costs and contributing to the company’s ‘green’ agenda in very real terms.

Automated electronic validation also ensures the company is being billed correctly and consistently according to its fee earner rate tables and/or service level agreement with the law firm or other professional supplier. Invoice aging will also decrease over time leading to better relations with your suppliers and reduced risk of litigation for delayed payment.

LSG also offers a more granular peer-to-peer to review of the invoice within its resolution desktop of Advocator System®. This is an optional service but the value comes from applying the SLA/billing guidelines consistently, which drives more accurate billing by the external law firms.

Collecting accurate uniform task based management system data is also valued as it brings a better understanding on how service delivery can be improved and then maintained. Bringing about a positive change of behaviour for the external professional supplier and internal executives is part of what we do.

Further, by effectively outsourcing the invoice compliance to LSG’s legally qualified experts, our client’s internal in-house lawyers or other executives can spend more time on what they are experts in: eg analysis of files, cases, provision of expert legal opinion in view of the external advice and the company’s objectives.

METRICS TO MEASURE OUTCOMES, PERFORMANCE AND FINANCIALS

Never before has there been so much attention placed on data and the importance of leveraging its potential. Those that master the latter are likely to gain insights that will give them significant competitive advantages and opportunities. The first step is to start collecting and measuring this data in a meaningful way. As H James Harrington said:

‘Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.’

For these reasons, our clients are using the data collected by our technology solutions. Metrics to measure total outcomes, performance and financials of your valued suppliers are provided as standard via our reporting solution Advocator System® dashboard. Reports provide line of sight across the organisation as a whole, by geography, by business unit, by supplier and/or by spend (eg fees, expenses and damages/indemnity), (un)realised fast-pay discounts and many others. Other benefits include harnessing the data to assess, plan and predict costs for similar matters, cases and projects according to defined criteria.

CONCLUSION

Procurement, legal and financial departments that want to enhance their operations should be considering technology solutions that are designed to do this. LSG’s solution delivers measurable value throughout the procure-manage-pay life-cycle as well as ensuring compliance against company best practice procurement processes, spend control program and billing guidelines. Consider also the power of metrics designed to give total outcomes, best performance and financial reports. These are the real goals here – the ‘thick end of the wedge’.

By Charlie Morgan, client relations manager, LSG.

E-mail: ccm@lsg.com.

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