What is a preferred vendor program (PVP)? It is in an initiative at a law firm or corporate legal department to aggregate a list of vetted service providers that provide one or more services at set price within a certain period of time. The pricing and timeframe for such services are typically defined in the Service Level Agreement (SLA), which is an agreement between the client and the vendor outlining the scope of services that will be provided. The service providers typically offer below-market, preferential rates and timeframes in the SLA to encourage a higher volume of work. Moreover, most programs require the participating vendors to enter into standing Non-Disclosure Agreements (NDA) from the outset. This enables the law firm or legal department to hit the ground running without worry about disclosure of confidential and/or proprietary information during initial discussions.
So, why would you do it? From the vendor’s perspective, there are a multitude of reasons. One of those reasons, and quite possibly the most important one, is the fact that they have a guaranteed flow of business that they can bid on and potentially win. Another major factor is the benefit of having a pipeline of additional clients within the firm or corporation at your fingertips – a golden opportunity for upselling and cross-selling. For the purposes of this blog, however, let’s focus on the law firm and in-house perspective.
The benefits of a PVP from the law firm and in-house perspective are broken down as follows:
- Increased size and scope of internal operations – A PVP supplements internal resources and enables your team to service more clients in different areas. Whether you are looking for a scanning vendor or a forensics expert, a PVP augments internal resources for areas of work where you simply do not have the expertise or enough coverage.
- Preparation and speed-to-market – A PVP decreases the start-up time for matters and helps you get to market quicker because it streamlines access to quality vendors. It takes the research and guesswork out of the equation because it is a program to source vendors for specific areas of litigation and practice support.
- Greater client satisfaction – All clients appreciate organization and preparedness. Having a PVP in place provides greater value to the client because they acquire the same work product at a lower cost, usually within a decreased timeframe. Moreover, service levels are higher and vendors are more accountable in ensuring the product and services meet expectations, maximizing overall value for the client.
- Minimizes ethical questions and mitigates risk – We aren’t experts in everything, nor can our firm or corporation hire enough people to cover the gamut of legal services. A PVP removes the ethical questions and risks associated with using non-experts to perform tasks that require expert service. Just a few examples would be forensic analysis and collection, translation of foreign language documents, etc. When you need an expert in a particular vertical, a PVP is your best friend; turn to it to source your vendor in that particular area. If/when it comes time for them to testify regarding the services provided, you’ll be happy to have an expert on the stand.
- Savings due to consolidating and leveraging – A PVP enables firms and legal departments to benefit from the savings associated with partnerships. Engaging service providers in a program that guarantees a pipeline of projects will inevitably lead to preferential rates. SLAs in PVPs typically reflect below-market rates for services and products.
- Team cohesion and know-how – A PVP helps create a consistent and defensible approach to outsourcing work. If there is a product or service outside the purview of your team, the project is just too big, or you simply don’t have enough resources at the moment, your team knows where to turn to provide the necessary service/product for the client. A PVP takes the guesswork out of the equation and equips your team for success.
And implementing it, how’s that work? First, you must define the scope. Do you want to cover all practice areas/departments, or are you taking a more targeted approach? Additionally, does your PVP need to cover all geographic boundaries, or are you mainly situated in one country or region? The scope of your program needs to be defined from the outset to ensure you have the necessary resources to create and maintain the PVP.
Second, outline areas of service providers that you want to cover. If you are looking to maintain a PVP that provides all services along the Electronic Discovery Reference Model (EDRM), your program will look drastically different than a shop looking to outsource collections. Familiarity with the entire span of services is critical to building a successful PVP.
Third, you must specify the depth, that is, how many players do you want to vet for projects? Typically, you’re looking at 2-5 vendors in each space to strike the right balance between convenience and competition. After all, no project is guaranteed and most projects still require multiple bids to appease internal stakeholders.
Finally, identify your primary point of contact for each provider/vender and start working out the contracts, specifications and billing. As mentioned above, PVPs usually involve standing NDAs and SLAs with the service provider so that everything is ready to rock-n-roll. The contractual work, coupled with defining deliverable specifications and billing requirements, are the cornerstones of a successful PVP.
It’s in place! How to leverage it? You want to leverage your PVP in the following situations:
- Projects that fall outside the area of expertise of in-house personnel
- Projects that are too large to be staffed in-house
- Periods of time when your team is short staffed
- Overflow work
As an example of how a PVP works, imagine a scenario where you need to collect the contents of your client’s mobile device for use in litigation. You don’t have any forensic experts on your team, nor the forensic toolkit necessary to perform a mobile device acquisition, so what do you do?
Worst-case scenario is you’ve never dealt with mobile collections and have no idea where to start. People actually collect mobile devices, you ask?
In this scenario, good luck. It’s 2016 and, yes, mobile devices do contain evidence.
In a bad scenario you’ve heard of mobile collections, but don’t have a clue who to use so you go to market. You send out some emails and wait a few hours, another day or two, and get a quote. You’re not sure if the pricing is right, so you feel around the market. You finally select a vendor after five days of research and quotes, and they agree to collect the phone. Three days later, you’ve agreed on a contract and they’re heading to your client’s office to collect the device. The vendor completes the collection and asks you a number of questions about how you want the data. You answer as best you can, but really it’s all a mystery. In the end, you get a deliverable that you don’t know what to do with, so you pass it along to the next vendor – your document review provider. Two weeks later, you’re reviewing the data and you’re a week behind the production deadline with more stress and angst than you wish to bear. You hope the vendor did a proper collection and you have all the data.
This scenario is not fun. It is high stress with little reward.
Best-case scenario is you get wind of the collection, you leverage your PVP for a list of vendors that handle mobile device collections, shoot them a quick email with case information and project scope, and you have quotes in your mailbox by close of business. You confer with the client next day and collectively select a vendor who will travel to the client’s office tomorrow, collect the device at a mutually convenient time, and provide a report that night or the next day of the acquired data. By end of week, you’re processing the data for substantive review and the vendor is working on your invoice, which will be sent early next week. You know the work product is good and the client is happy.
In this scenario, you are prepared because you have a PVP in place, know what to do, and know exactly what to expect. It is low stress, high reward because you nailed this project!
I’ve had a PVP in place, when do I revisit? A PVP is a living, breathing program. You should constantly evaluate potential vendors in the space to determine what fits your needs – price, service, culture, location, rapport, etc. – in all areas of your program. Engage in demos, read product briefings and just totally immerse yourself in the market! Build the best PVP you can, and at the very least, you should revisit your vendor selections once a year. You don’t necessarily have to change anything, but certainly evaluate things to make sure you’re in the game.
That’s a rundown of a preferred vendor program. Consider starting a PVP or revisiting your existing program today. Whether you are in-house or at a firm, a PVP can certainly reap benefits for your team and your clients.
By Ricky Brooman and Adam Rosenthal#CorpLegalDepartment #LitigationSupportoreDiscovery #Businessandlegalprocessimprovements #PracticeManagementandPracticeSupport #Firm