Don’t fight Procurement, prepare them
Hi there,
"Unless you can tell me what a 12(b)(6) motion is, I'm not going to let you negotiate my fees."
That declaration from a GC at our Exchange event drew quiet nods of agreement from the room. Senior GCs and Am Law partners all recognized exactly what was underneath it. The traditional discomfort with letting Procurement anywhere near legal pricing. And the suspicion that defiance won't hold much longer.
Legal is the last major cost center that has largely escaped Procurement scrutiny. But that window is closing, thanks to AI. Expectations around the impact that AI will have on the legal industry (whether or not those expectations are reasonable) has made legal spend a new target for the CFO. If not a target, then certainly a new area of curiosity for the finance team.
When a GC walks into a budget conversation carrying $2 million in forecast rate increases, the CFO doesn't see $2 million. She sees $40 million in revenue that the business running on a 5% margin has to generate just to cover it. That math has always been true. Expectations are just making it harder to avoid the conversation.
Expertise isn’t a defense anymore
The instinct to keep Procurement at bay is completely understandable. Procurement doesn't speak legal. A benchmark on partner rates doesn't capture what a senior litigator is actually managing when a matter turns complicated. GCs know this.
The problem is that legal expertise alone isn't enough of a defense anymore. The CFO's patience with unexplained spend is starting to run out. You may not think Procurement has earned its place at the table, and in some cases, that may well be true. But that misses the point. Finance is looking for answers. If Legal is not providing those answers, then Procurement will be empowered to find them.
Firms are feeling it too: clients are starting to measure what AI productivity gains should look like in practice. (I know what you’re asking — how??? The most popular question I’m being asked - and worthy of its own newsletter 😉). AI productivity gains by law firms (which they are more than incentivised to find) make defending rate inflation harder than it's ever been. Both sides of the relationship are being pushed toward the same inevitable conclusion.
One GC at the Exchange cast the future in stark terms: "In our organization, I won't let Procurement in. I'm going to lose that battle at some point in time because the CFO's going to mandate it."
But losing a battle doesn’t mean losing the war.
Not whether, but when
It’s not whether Procurement gets involved, but shaping how it happens when it does. If your team is already using PERSUIT, then the conversation is easy peasy. Nothing to see here. (Actually — a lot to see here. ‘Have you seen what Legal is doing with PERSUIT? Legal is doing procurement better than Procurement is!’)
The truth is that Procurement isn’t just some monolith that only sees dollars, and many would welcome the opportunity to work alongside GCs.
As one Chief Procurement Officer recently told me, “It's down to people and building the relationship with the General Counsel and the core team and really driving and showing some value. It’s not saying, ‘I know everything better.’ With a few simple tricks and a bit of competition, you still can choose the right lawyers for you, but we can drive it in a more cost-effective way.”
Procurement needs enough grounding to participate without destroying the conversation: market rate benchmarking, historical spend data, structured competitive processes. A foundation for asking better questions and evaluating the answers (not a law degree).
We’re approaching 90% of all enterprise legal work running through PERSUIT being priced on outcomes, not hours, built on exactly the visibility and process discipline that makes a CFO conversation a pleasure and a procurement conversation productive.
The legal departments defining what comes next don't care if Procurement knows what a 12(b)(6) motion is. They're building the processes that make the question unnecessary.
Lead that transition or get pulled through it. The difference is who sets the terms.
Cheers,
-Jim
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