SITUATION

The Commercial Insurance business had approximately 80 firms providing legal services for claims with an annual spend on external legal services between $50 to $70 million. The recent creation of a Legal Services Centre of Excellence highlighted a disparity between types of services provided, expired contracts and an overdue obligation to review rates with firms on the panel.

A Legal Partnership Program would be established to review and consolidate the panel of legal services providers to reduce legal panel firm numbers and implement a legal panel framework and costing structure to enable the business to manage the external legal panel more effectively to achieve cost savings, manage claims more efficiently, and fully utilise external legal providers.

APPROACH

Once the scope was defined through a scoping study across six lines of business, we established a strategy and developed the plan to address the work in three phases:

Phase 1: Standardise: Review hourly rates and caps on fees; Standardise existing arrangements across to a common form of contract; Align all panel contracts to expire on the same date; Align business needs with panel capability; Standardise reporting, service levels and performance monitoring.

Phase 2 Optimise: Collect consistent data about panel performance, legal spend, and claims outcomes; Create an effective panel management framework; Improve efficiency of internal claims handling processes and engagement of external panel firms.

Phase 3 Integrate: Assess impact on panel arrangements resulting from Phase 2 process review; Possible sourcing activity to further consolidate panel; Maximise efficiencies gained from Phase 2.

OUTCOME

The Legal Partnership Program was quickly established and delivered with the following outcomes:

  • Increase coordination and control of legal services providers by moving all providers onto an existing standard panel contract with set pricing and performance data and moving  all providers onto a new centralise panel agreement
  • Improve legal service provider relations and incentivise performance improvements
  • Reduce number of external legal services and total spend to achieve better economies of scale
  • Improve quality of legal services by applying performance measures with structured data and reporting
  • Centralise external legal service management, increasing efficiency, reduce duplication and improve claim outcomes
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