BigLaw Chafes at Online Reverse Auctions, Increasingly Used by Corporations to Cut Legal Bills
Large law firms are increasingly being asked to participate in online reverse auctions where corporations award business to the lowest bidder.
The process is spreading to more complex projects, raising concerns among some lawyers, the Wall Street Journal (sub. req.) reports. Among the companies that pit law firms against each other in anonymous online bidding are eBay, Toyota, Sun Microsystems and GlaxoSmithKline, which plans to phase in the process for all its substantial legal needs.
The story explains how the process works: Law firms “race against the clock to tender incremental discounts against competing bids. If someone introduces a new low price in the last minute or two of the session, it can be extended for several minutes—launching another round of calculations and lower offers.”
Toby Brown, the director of pricing at Vinson & Elkins, was among those confessing doubts. “Is it making all of us uncomfortable? Yes,” he told the Wall Street Journal. “Especially when you start to move away from the more routine sort of work.”
Prior coverage:
ABA Journal: “More Than a Quirky Name, Shpoonkle Aims to Get Legal Reverse-Auction Model Right”
ABA Journal: “RFPs Won’t R.I.P.: Law Firms Face Increasing Demands When Responding to Requests for Proposals”
