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When Preferred Vendor Programs Go Bad

Ken Lopez
By: Ken Lopez

Alternative Fee Arrangements, Pricing, Litigation Management, Management, Litigation Consulting, Litigation Graphics, Jury Consultants, Trial Technicians

It has become quite common for major corporations to institute preferred vendor programs for their legal representation, under which a limited number of law firms pre-qualify to do legal work for the corporations and the corporations turn exclusively to these law firms. As an article on the American Bar Association’s website noted in 2014:

Companies create preferred counsel lists not only to cut costs but also to build relationships with subject-matter experts relevant to their industries in their most important geographical areas. By consolidating work across fewer firms, companies deepen their counsel’s familiarity with their issues and get more consistency in their representation.

Corporations are also using preferred vendor programs to select other types of outside professionals – including, significantly for our purposes, litigation consultants, jury consultants, litigation graphics consultants, and trial technicians. A few years ago, in fact, we published an article here suggesting no fewer than 17 best practices that should apply to the implementation of a preferred vendor program for trial consultants.

The third of these suggested best practices perhaps should have been listed as the first, since the way I see things in our industry, it is the most relevant to what is going on today. It was:

Remember, litigation is generally a one-time thing: You never want to be so focused on price that you overlook this. For trial support, you generally only get one bite at the apple, and vendors, especially new ones, can be a risk. So, as you consider procurement, be mindful of quality. Trust me, all firms are not created equal in this industry.

I have noticed that preferred vendor programs for trial consultants tend to be used by insurance companies, pharmaceutical companies, banks and energy companies – all of them types of companies that often face a variety of small pieces of litigation at a given time rather than less frequent and larger cases. For the same reasons that apply to the hiring of law firms, including a consulting firm’s ability to gain familiarity with recurring issues in these small cases, this practice can make sense as a business proposition.

However, I see a major problem arising here that A2L frequently encounters. These preferred vendor programs cannot address both high-volume, low-price companies and low-volume, high-quality companies at the same time. We always view ourselves as part of the high-quality part of the spectrum, and I become concerned when I see what often happens when a large insurance company is involved in a major case in which only a small number of companies, including A2L, can provide excellent service. We are often told that we are not a member of the insurance company’s preferred vendor program and that we aren’t even eligible to get this work.

We often learn that the preferred vendor is a low-cost, low-value provider, usually a small shop with little serious trial experience. This is not a good practice. Outstanding trial lawyers shouldn’t be hampered by the constraints of a preferred vendor program in an important case. The result usually defeats the purpose of such a program and ends up more expensive for the company, since the vendor can’t do the work to the required standard and the legal team has to work twice as hard to achieve a result that is not as good.

Other free A2L resources that discuss preferred vendor programs, alternative fee arrangements, and litigation management include:

litigation consulting graphics jury trial technology

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