What's Happening?
Managing a panel of outside law firms is a critical function for corporate legal and insurance claims departments. A well-structured panel can drive efficiency, control costs, and ensure access to premier legal expertise. Conversely, a poorly managed panel can lead to inflated spending and inconsistent outcomes. A focus group hosted by Wolters Kluwer explored best practices in panel management, revealing that 83% of participants have an established panel of firms. The discussion highlighted the importance of diversity, equity, and inclusion (DEI) in panel management, with some organizations shifting from mandatory DEI data submission to voluntary collection. The optimal size of a panel varies, with some organizations managing up to 400 firms, functioning more like a preferred provider program. Metrics such as spend, billing rates, and matter outcomes are essential for informed panel decisions. Exceptions to panel engagement are common, requiring specific expertise or jurisdictional needs, and are managed through formal approval processes.
Why It's Important?
Effective panel management is crucial for legal departments to maintain cost efficiency and high-quality legal services. The focus on DEI reflects broader societal shifts towards inclusivity and equitable practices in business. By optimizing panel size and using robust metrics, organizations can ensure meaningful engagement with law firms, fostering strong partnerships. The ability to manage exceptions flexibly allows departments to address unique legal needs without compromising quality. These practices can lead to better negotiation positions, securing favorable rates and discounts, ultimately benefiting the organization's bottom line.
What's Next?
Organizations may continue to refine their panel management strategies, focusing on enhancing DEI practices and optimizing panel size for better engagement. The industry may see increased adoption of structured feedback mechanisms and centralized performance data to maintain panel quality. As legal departments analyze their spend, they may identify a 'natural panel' of frequently used firms, leveraging consistent business for better negotiation outcomes. Workshops and collaborative problem-solving exercises with panel firms could become more common, fostering deeper partnerships and understanding.
Beyond the Headlines
The shift towards voluntary DEI data collection suggests a move towards more collaborative and less prescriptive approaches in legal panel management. This could lead to more genuine efforts in fostering diversity within law firms, impacting the legal industry's culture positively. The emphasis on robust metrics and structured feedback mechanisms may drive innovation in legal operations, encouraging firms to improve efficiency and service quality. As organizations refine their panel strategies, the legal industry may see a trend towards more strategic and data-driven decision-making processes.
