This paper seeks to identify the troubles and issues faced by GlaxoSmithKline (GSK) while sourcing the legal services in the US along with the detailed analysis of the company. The analysis is provided through the application of Situational Analysis while the alternatives have also been provided for the problems identified in the event. Lastly, the paper tries to propose the recommendations to the company from the mentioned options.
GlaxoSmithKline (GSK) has been recently hit by a case of Catherine Whitmore, who died of an aortic aneurysm while on blood pressure medication. The company has to hire a legal firm within 20 days in order to respond. The company has given this task to Sophia Keating, the managing attorney at GSK.
She has to hire a legal counsel that has a vast experience of dealing legal matters and have the highest bid while keeping in mind Outside Counsel Selection Initiative (OCSI). The OCSI is a process for hiring the new counsel. The company is in a state of paradox as they know that the company would lose the case if they did not hire a legal counsel in time. She needs to develop and manage a portfolio for hiring the firms other than the OCSI.
GlaxoSmithKline (GSK) is a UK-based Pharmaceutical company that utilizes an innovative new approach to procuring outside legal counsel. It replaces relationship-based choice and law firms’ traditional time-based billing with data-driven decision-making and an online reverse auction. Like other companies, the recent economic recession has driven the company to scrutinize its legal spend. In this case, the company is facing a legal case due to the death of a patient, Catherine Whitmore.
The company wants to hire a legal firm in time to respond. The company has given this task to Sophia Keating, the recently hired managing attorney. She has employed a new approach for engaging the legal firm based on their experiences and proposal fee. The GSK veterans assure her that this approach would force down prices and improve the quality of work by consistently increasing the thoroughness in the procurement procedure. All the same skeptical, she runs the process of systematically studying and comparing the competing firms’ bids.
This case also defines the process by which these approaches have been developed and implemented. Beyond the implications for law firms and other legal service providers, the lessons from this case are applicable for learning about the institutional change, procurement processes relevant to many studies, and how to increase rigor in typical informal business processes.
Issues Faced by GSK
After the recent economic recession of 2008, most of the companies started implementing cost-cutting strategies. More than 70% of the companies in the US and UK were spending around $5million on litigation cost. Among the healthcare corporation, the percentage was 30% to 40%. Therefore, the management of the companies in the healthcare sector forced their legal heads of the companies to rein in legal spending. Like other healthcare companies, it also forced the GSK to scrutinize its legal spending.
The company got hold of various steps and used different approaches to reining the legal cost. GSK ended the relationship with the legal firms and hired external General Counsels to reduce their legal cost. In an another approach, some legal heads shifted work to less costly or more efficient companies and non-traditional legal service suppliers such as overseas legal process outsourcing companies. The General Counsel of the company installed an electronic billing system called e-billing system and hired legal professionals and data analysts for monitoring the legal spend. He also started training internal resources to get better buy versus build decisions and shortened case lifecycle in order to rein the legal spend.
Decentralized Management System Issue
In the year 2008, the company hired Dan Troy as its General Counsel. The company employed him because it was unable to make out its legal spending.The company did not even recognize the total of legal spending due to decentralized management system. When he joined the company, the company had several million dollars litigation exposures resulting in a huge legal spend.
After joining the company, he centralized the management system of the company’s legal spend. For that, he formed a team, namely Global External Legal Relations Team (GELRT) within the legal department to alter the paradigm by which the company was paying for legal services by running all the company’s legal outside counsel assignments around the world to alternative fee arrangement whenever possible…………………..
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