We previously provided you five questions to determine whether your law firm vendor management program is sufficiently comprehensive. Given the attention drawn to such programs by regulators such as Office of Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB), it should be no surprise that these five questions are just a few of the questions you should ask. Here are five additional questions:
6. Is your program sufficiently nimble to respond to new developments/issues?
No vendor management program can be crafted and then simply placed on autopilot. Just as regulations and business needs frequently change, so too must a vendor management program adapt to changing requirements. The best programs are designed to allow for quick and manageable changes. This usually includes a process for identifying changes, a communications system for notifying vendor law firms about new requirements, a process for modifying documentation used in the review process, and tracking system for identifying the stages of implementation. A program designed to accommodate changes makes it easier to improve the program on an incremental and frequent basis, as opposed to trying to make numerous and significant changes only once or twice a year.
7. Does your program take advantage of internal expertise within your organization?
Your organization is comprised of people with diverse skills and experience. Your vendor management program should capitalize on this wealth of experience by allowing for involvement from various employees. Some employees will be best at assessing vendor law firms’ operational activities, while others will have the insight to assess the vendors’ legal activities. Employees who communicate daily with law firms will have insight on each firm’s ability to manage timelines and expectations, and employees who handle documents prepared by firms will have insight on quality and effectiveness. Capturing the vast body of knowledge within your organization should be a key aspect of your vendor management program.
8. Does your program ensure that stated expectations are, in fact, evaluated?
Making lists of expectations is easy. Making sure your program encapsulates all expectations is not. Designing a system which allows for a consistent and thorough evaluation of all expectations takes experience and patience. It is important to consider how each expectation is to be assessed across different environments, as the legal process varies widely from state-to-state. What works for evaluating a large law firm with high referral volumes may not work as well for a smaller firm with fewer matters. In our experience, the process of creating evaluation systems requires a heightened awareness of the many different environments, as well as how each of your expectations varies across these environments.
9. Does your program consolidate and capture all internal and external information streams?
How can you really know if your vendor law firms are successful at meeting your needs? Getting an informed answer to this question requires asking many questions and evaluating information from various sources. We have found through our years of experience that the best vendor management programs are fed by many different information streams. These sources include those with knowledge about regulatory requirements, the competitive landscape, and pending changes. Keeping abreast of frequently updating information requires a system for identifying, evaluating, and responding to changes. Your program should be designed with such a system in place as this will alleviate the stress of managing large networks of data.
10. Are there real consequences for law firms that fail to correct identified issues?
We all like to think that vendor law firms will respond quickly and effectively to issues identified while servicing your needs. This is true in many cases, but not in all. Firms may lack the personnel or financial capability to address certain deficiencies. Other firms may not be willing to accommodate changes required by clients who do not provide a significant volume of referrals to the firm. Still other firms may not be able to figure how to handle special requests which may run counter to the requirements provided by other clients of the firm. Regardless of the reason for non-compliance, vendor management programs should have measures in place to address deficiencies which are not adequately remediated. Is this something that can be waived depending on the circumstances, or is the issue non-negotiable? Does the failure to correct an issue raise additional questions about the law firm’s abilities? Is it time to part ways? These are all valid questions to consider when creating and managing your program.