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Modified legal services procurement process
Source publication
As companies concentrate on their core competencies, they increasingly require business-to-business services. Consequently, research on services is increasing, and the procurement process is under investigation. This is also true for the specific fields of the professional knowledge-intensive services. However, the majority of these studies have be...
Contexts in source publication
Context 1
... might not reflect the actual needs because the definitions employed by the internal legal department might not encompass all issues because of the lack of expertise. Next, the service provision phase begins. The participating parties exchange information, after which the service provision is conducted. An interesting aspect of this phase is that the external legal providers perform their tasks independently. There is no control mechanism, and the case company does not monitor the external legal provider. Moreover, the external provider works in an isolated manner without much contact and communication with the case company’s (legal) departments. This was explained by the fact that the internal lawyers do not have the expertise to contribute to or to control the process. Consequently, the internal legal department is not involved directly but only serves as coordinator. Passivity and the inability to infer actions influence the outcome of the legal service. Finally, the postservice provision phase begins. The official participants are the legal department, the controlling department, the external legal service providers and, in special circumstances, the business unit and the procurement department. However, there was no sign of cooperation between the departments. The legal department seems to be responsible and directs all actions. The internal legal advisor examines the legal services results based on plausibility checks and quality assessments. However, because of the lack of expertise, the head of legal operations is aware of the fact that internal lawyers can simply assume whether the legal performance is of high quality and correct. To assess the plausibility and quality, the case company uses an evaluation form with mandatory and fixed criteria. It focuses on the output. However, these evaluation criteria are not operationalized. Furthermore, the evaluation of the legal services provision process and soft criteria such as cooperation and interaction are ignored. There are no key performance indicators for legal services. Moreover, the internal lawyer examines the invoice to review the daily and hourly rates as well as the hourly billing. In case of doubt, he contacts the external legal provider and asks for clarification. At the end of the process, the internal lawyer transfers his overall results into an internal legal data base, which can only be assessed by the legal department. It is used for future research. The case company does not keep a record of the outputs, unless they become absolute. Consequently, there is no knowledge and expertise accumulation. Finally, the internal lawyer approves the invoice and prompts the finance department to pay the bill. Concerning long-term relationships, the case company installs relationship managers and organizes review meetings. With this procedure, the case company tries to reduce uncertainties emerging as outlined by the agency theory. Moreover, these review meetings are used to make suggestions on how the supplier should be placed for possible future engagement. Concerning short-term relationships, no further measures are established, and feedback is missing.The impact of legal services on the net operating profit or on the avoided expenditures is not analyzed. Moreover, there are no incentives concerning the legal areas. As indicated above, there are certain major issues in the fuzzy procurement process for legal services in the case company. A systematic structure of the process seems to be the basis for improvement (Lewis and Brown, 2012). Therefore, this section further adapts the service procurement process to legal services. A striking inadequacy is associated with the legal advisor’s attempt to specify the needed legal service (Selviaridis and Spring, 2010). In the case of outsourcing, the requirements and needs cannot be determined exactly by the internal lawyer, due to the lack of expertise (Werr and Pemer, 2007). Van der Valk and Rozemeijer (2009) state that the identification of services, their content and their specifications will remain imprecise and incomplete either way. Due to the lack of expertise, even the internal lawyers cannot define the requirements precisely (Axelsson and Wynstra, 2002; van der Valk, 2008). For particular cases in very specific fields of legal regulation, it is virtually impossible to specify the expected methods, procedure, time and effort (costs) of a provider that are required to deliver high-quality performance – without expertise in the field. As information asymmetries can be viewed as the main cause for this, the specification of legal services should use the expertise of external legal service providers. Findings in the case suggest that a first vague definition of the legal issue from the internal legal departmentshould be sufficient to start the procurement process. After a couple of process steps, a detailed specification should be developed together with the external expert. This is illustrated in figure 1. The following paragraphs discuss the new seven-step process for legal services procurement. In the demand identification phase, it was perceived that internal legal advisors do not work proactively but only through acclamation. This seems to be a common feature as expressed by Lenz (2012) and Thiell (2006). Moreover, a major challenge is to identify a legal issue early in the process (Malach et al., 2006). This identification problem is exacerbated by low cooperation, business unit egoism, lack of time and information asymmetries between business units and the legal department (Pemer et al, 2014; Susskind, 2008). To identify the legal issues as early as possible, management and employees should be trained in perceiving the legal issues (Lenz, 2012; Susskind, 2008). Therefore, rules could be established regarding the appropriate time to consult the legal services department (Grout et al., 2007; Staub, 2006; Thiell, 2006). For instance, a defined purchasing expense or defined topics could be used (i.e., checklists). Areas such as marketing and research and development as well as topics such as healthcare, merger and acquisitions, employment law, innovation and compliance seem to be extremely common. Concerning the information gathering phase, there are further inadequacies. Concerning the information gathering, one problem is that a company needs to have the relevant competencies and the capacity to perform the required detailed market analyses (Axelsson and Wynstra, 2002). These are required because companies should have an understanding of the small, specified and flexible professional service firms, as their services increasingly surpass the full-service providers (Chung et al., 2006). Despite the preference of local legal service suppliers, organizations should take into account the possibility of buying legal services globally (Sako, 2009). This is viewed as critical by Staub because of the country-specific jurisdictions (Staub, 2006). However, organizations ignore chances if they do not procure globally. The problem recognized by Staub can be solved by the separation of legal services into standardized and individualized legal services. Standardized legal services can be procured globally. Consequently, profound market analyses are needed (Brivot, 2011; Lenz, 2012; Staub, 2006). However, systematic searches and market analyses are rare (Werr andPemer, 2007). As the internal lawyers are not proficient in market analyses, they need the support of the procurement department because it provides the competencies to perform the market analyses. However, the identification of suitable suppliers will be difficult because of the lack of expertise (van der Valk andRozemeijer, 2009; Wittreich, 1966). The close cooperation between the legal department and the procurement department is recommended. As was mentioned by the case study interviewees, a structured approach is highly important. This might include a harmonized and unified request for proposals as a standard instrument to gather information (similar to the findings in Werr and Pemer, 2007). All of the information gathered contributes to the supplier selection phase. The majority of legal suppliers are selected through indirect and subjective indicators (Staub, 2006; van Weele, 2010) depending on reputation, trust and existing networks (Nordenflycht, 2010; Pemer and Skjolsvik, 2013; van der Valk et al., 2009). However, these criteria are subjective and can be biased (Graebner, 2009), and manipulations are possible. Whether companies use subjective or objective selection criteria, a joint approach and extensive cooperation are recommended (Ellram et al., 2010; Lenz, 2012). Experience and the composition of the selection team influences the selection decision (Garry, 2008). Therefore, a balanced cross-functional team should be assigned to the legal services provider selection (van der Valk and Rozemeijer, 2009). At this point in the procurement process, we suggest an alteration with the implementation of an additional process step “(legal service) specification”. Without this phase, an inaccurate specification could be established and cause serious consequences. The specification phase aims at including the external expert in a cross-functional team to specify the exact legal service (Axelsson and Wynstra, 2002; Kissling, 1999; Pemer et al, 2014). From an agency perspective, this decreases the information asymmetry between the internal legal department (principal) and the external legal service providers (agents). Organizations then can directly use the external lawyer’s expertise (Selviaridis et al., 2011). According to Carson (2007), specifications are needed because they lead to a better outcome. Therefore, it is suggested to use service level agreements that define, for instance, the number of workdays, which includes lawyers’billable hours as well as the service elements. Instead of representing a detailed contract, this specification phase ...
Context 2
... legal services are oftentimes individual; however, a certain part can be standardized and systematically organized (Fließ andKleinaltenkamp, 2004). To guarantee the best outcome “cross functional teams” including the external legal service provider in some phases and a structured systematic procurement process are required (Thiell, 2006; van Weele, 2010). It is not necessary to involve the procurement function in every step, however in some important ones (Sieweke et al., 2012). Figure 1 visualizes a suitable procurement process for legal services and depicts the integration of the different parties. This contribution reviewed professional services and existing service procurement process models. A six-step process served as a reference model to analyze the procedures for the procurement of legal services in practice. The case study setting allowed for analyzing several procurement procedures (four case examples) from the early definition phase to the final post-service phase. Findings from the case imply the consideration of an additional process step. In previous process models, demand is specified within the demand identification and specification phase (step 1). In the case of only one process model, a second specification in is conducted in greater detail in the information gathering phase (step 2). In the original process models, this task is conducted by internal personnel. As indicated in the case, incomplete and asymmetric information prevents a precise and comprehensive demand description in the earlyprocess steps. Therefore, in our model for the procurement process of legal services, a detailed specification is now established together with the legal service provider in a separate and new phase, the specification phase (step 4). Finally, the procurement process for legal services is established with seven phases. Representatively, a swim lane chart visualizes the legal services procurement process and the parties that participate in every phase. This model could offer, for any procedure or routine,better quality and efficient outcomes through standardization (Susskind, 2008; Tate and van der Valk, 2008; Wynstra et al., 2006). The presented systematic process offers transparency and supports the organization in achieving its goals. However, there are certain limitations. Few articles directly refer to legal services. Nevertheless the findings for professional services were transferred and projected to legal services. To alleviate this limitation, the case study was used to check plausibility. However, only a few case examples in only one case company have been investigated. Therefore, future research should be performed to verify the results and the transferability to other professional services such as consulting or marketing ...
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Citations
... Although the significance of business services is recognized within a company, the majority of purchasing managers still struggle to implement an efficient purchasing and evaluation process ( Rottmann et al., 2015). As various researchers have indicated, such problems are often induced by the specific characteristics of business services (de Oña et al., 2014;Hallikas et al., 2014;van der Valk and Rozemeijer, 2009). ...
... Grönroos (2000) is even more accurate: he describes evaluations before, during and after the deployment of the business service. Different other authors have also developed structured process designs for the purchasing of business services ( Bals et al., 2009;Rottmann et al., 2015;van der Valk and Rozemeijer, 2009). However, there are variations in the granularity of the process phases, the assigned manager and the period in which the evaluation takes place. ...
... Kaufmann & Gaeckler, 2015;Mackelprang et al., 2014) and purchasing phases (e.g. Rottmann et al, 2015;Alkin & Christie, 2004), and indicates in how many different purchasing phases the purchasing department is integrated. The evaluation of the SP's tender builds upon experiences rather than on well-defined criteria; the social exchange is highly relevant for marketing services ...
Purpose
This study aims to observe different purchasing and evaluation phases during the buying of business services, thus revealing the necessity for integration of different entities during the purchasing process.
Design/methodology/approach
On the basis of a systematic analysis, explorative case study methods involving five Swiss multinational companies are used. In addition, the study provides a structured literature review and uses the short-term perspective of the industrial marketing and purchasing (imp) approach as a conceptual approach.
Findings
In addition to specific and business service-related difficulties, the research observes different phases “levels of integration” within the evaluation process that takes place within a company: a preparation phase, an acquisition phase and an operational phase.
Research limitations/implications
The study is limited to a qualitative research approach addressing five cases from Switzerland. However, assuming the results are generalizable, future research on service evaluation should always differentiate between the different phases of an evaluation.
Practical implications
It is shown that for practitioners, social, financial, service and informational exchange (as per imp approach) is closely related to an adequate integration of all involved entities during the different phases of purchasing. Therefore, this research provides practical support for the purchasing process to ensure highly efficient business services.
Originality/value
As there has been almost no research on business service evaluation, this paper is the first work known to extend the short-term perspective of the imp approach by addressing the different purchasing phases of an integrated service evaluation.
... Finally, it should be stated that although the model was proposed several years ago, it is used as a reference in some recent studies that examine business service buyers and sellers (Rottmann et al., 2015;Zhou et al., 2017). The following section is devoted to establishing our hypotheses for the case of transport services outsourcing. ...
Purpose
This research proposes ideal interaction patterns for structural dimensions (buyer and supplier representatives involved in the interaction and buyer and supplier critical capabilities) for transport service outsourcing. The objective of this paper is to establish whether those ideal interaction patterns are determinants of success of the interaction. In this paper, the latter is measured against the corresponding process success and outcome success.
Design/methodology/approach
This paper proposes a conceptual model based on prior literature and adapted to this specific case of transport services. The proposed model is approached using the Partial Least Squares Simultaneous Equation Models (PLS-SEM). For this, the result of a survey to senior management at European machinery, electronics and automotive sector manufacturing plants has been used.
Findings
When companies possess the proposed ideal patterns for the structural dimensions, this brings with it positive effects on both the process success and the outcome success obtained by the outsourcing plant. Therefore, buyer-supplier relationships have been recognized to play a key role in the outcomes of this interaction and that the design and management of interfaces between companies and their logistics providers are critical.
Practical implications
Managers can use the present research findings to produce an appropriate interaction design that includes the representatives and capabilities required to make a success of transport service outsourcing.
Originality/value
This paper contributes to the literature on transport research by specifically establishing ideal interaction patterns for the structural dimensions that buyer and supplier’s companies need to consider for successful transport services outsourcing to be achieved. Besides, the present research proposes a multidimensional measure of outcome success that combines major strategic, operational and financial outputs. Finally, this research represents the first survey-based empirical evidence on the topic, having used a sample of 93 plants belonging to many different companies in 5 European countries.
... Moreover, service purchasing and quantitative and qualitative evaluation both occur at different phases of the purchasing process (Rottmann et al., 2015). Before firms sign a service contract, requirements (e.g., from the essential user) need to be defined. ...
