The Corporate Purchasing Project is a groundbreaking research project on the ways in which S&P 500 legal departments assess, procure, and manage outside legal services.  It aims to develop fair and unbiased information about how large corporations make these important decisions in order to help general counsel learn from one another and to educate law students and legal professionals about these issues.

This research falls squarely within an important, yet vastly under-studied, aspect of legal practice – the purchasing decisions of sophisticated end-users of high-quality legal services.  Our project is unique in a number of respects.  Academic research on the delivery of professional services, which is remarkably thin to begin with, typically concentrates on consulting and investment banking.  This leaves many questions specific to the legal profession – which has many unique qualities – both unexamined and unanswered.  And although some academic institutions are beginning to study the legal profession itself, much of the focus is upon the internal dynamics of law firms, rather than the needs and interests of law firm clients.

Apart from the Program ’s research, hardly any serious consideration has been paid to the ways in which corporate clients are responding to the numerous changes in law firms and the legal profession itself.  Much of the research conducted to date is fragmented through a variety of unconnected disciplines and lacks a cohesive link to the legal profession itself.  Further, the bulk of quantitative data collection has focused on small and mid-sized companies, does not account for response rates, and does not control for the nature, importance or type of legal work in question.  The Program’s research thus fills a significant information gap and will yield considerable returns that will benefit both the scholarly community and the legal profession itself.

The Program has identified 76 S&P 500 companies within four key industries:  (1) Investment Banking; (2) Commercial Banking and Savings; (3) Pharmaceutical and Medical Manufacturing; and (4) Petroleum.  To date, Program researchers have completed in-depth, 90+ minute interviews with over half of the chief legal officers in our sample.  Interviewees included the top lawyers at all of the investment banks in the S&P 500, over half of the commercial banks, three-quarters of the petroleum companies, and several pharmaceutical manufacturers (which is the only industry in which interviews are still being scheduled and conducted).  We anticipate completing the qualitative interview process in Spring 2008.

The qualitative interviews laid a solid foundation for the creation of a unique quantitative survey on how general counsel hire, discharge and manage outside counsel.  The survey design was a joint work product of Professors Wilkins, Coates, Nanda, and Associate Research Director Michele Beardslee, with the expertise of Robert Nelson (Director of the American Bar Foundation and one of the principal faculty in the Program) and contributions from Research Fellow Sean Williams.  Feedback on early drafts was provided by the Program’s Senior Distinguished Fellow, Ben Heineman (GE’s former Chief Legal Officer), as well as several members of the Program’s advisory board.  We then pursued comprehensive pre-testing with a representative sample of 20 S&P 500 companies.  This pre-test enabled us to better predict response rates for the final product and enabled us to clarify and refine several of the topics examined.

The Program has now reached the final stages of data collection.  The quantitative survey was distributed to the chief legal officer of every S&P 500 company in late October 2007, and a number of completed surveys already have been returned.  Program researchers are in the process of following up with general counsel, collecting and coding data, and preparing to embark upon an ambitious series of publications and presentations.  Raw data collection will be completed in Spring 2008, which will be followed by detailed statistical analysis and benchmarking.

We expect the corporate purchasing research to reveal a wealth of new information and statistical data on the ways in which legal departments assess, purchase, and manage outside legal services.  Specifically, our work explores four topics that are of substantial importance but about which there is little systematic information:

1. How companies evaluate the quality of legal service providers;
2. Under what circumstances companies terminate their relationship with law firms;
3. How companies evaluate whether to follow “star” lawyers when they change law firms; and
4. How companies manage the intersection between law and public relations.

The data analysis will lead to numerous publications discussing the results and implications of both the qualitative and quantitative studies, which will benefit both the scholarly community and practitioners in the field.  Project leader Professor John Coates, who is the John F. Cogan, Jr. Professor of Law and Economics at Harvard Law School, already has begun working on an important paper based upon the qualitative interviews that will be jointly authored by the entire research team.  A series of later works have been planned to discuss and disseminate the implications of the quantitative data collection as well.  An initial analysis of the lessons gleaned from the corporate purchasing research also will be shared with high-level managing partners and practice group leaders from law firms worldwide during the next offering of the Program’s Executive Education course Leadership in Law Firms in May 2008 and October 2008.

Bibliography on Corporate Purchasing