GlaxoSmithKline: Sourcing Complex Professional Services Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

GlaxoSmithKline Sourcing Complex Professional Services Case Study Solution

Abstract

GlaxoSmithKline is one of the most recognized firms in the world for producing medicines for many of illness and disease. A new General Counsel had been appointed in the year 2008 Dan Troy, who had taken various steps for improving the legal spending of the company. Firstly he had formed a team by the name of Global External Legal Relation Team (GELRT). The company had been attempting to improve the procurement methods for outsourcing law firms in which the responsibility is given to the GELRT.

In the year 2010, Harlow and the GELRT adopted a new technique for hiring GSK’s legal work which is the reverse-auction process. This process involved in issuing a request for proposal to the law firms in which the best firm had been selected after reviewing their recommendation.

Introduction

GlaxoSmithKline is one of the most recognized firms in the world for producing medicines for many of illness and disease. The company had been formed in the year 2000 through the merger of Glaxo Wellcome and Smith Kline Beecham which became the sixth largest pharmaceutical company. It is essential for these medical firms to have a legal department due to many complaints filed by their clients and customers on their products.

The company had been using various procurement methods which have been mainly engaged by the legal department. In the year 2005, the vice president and general counsel of GlaxoSmithKline appointed Marty Harlow for the procurement of the legal matters since he had the experience in procurement of other goods and service of 25 years. However, Marty lacked the experience in the legal department. He had adopted the ancillary services on the GSK’s legal work which had saved the company around $23 million.

A new General Counsel had been appointed in the year 2008 Dan Troy, who had taken various steps for improving the legal spending of the company. Firstly he had formed a team by the name of Global External Legal Relation Team (GELRT) as Bob Harchut as the leader for identifying whether Alternative Fee Arrangement (AFA) is feasible for legal spending. The AFA was considered a better method for legal spending than anhourly rate.

However, after GELRT used shadow billing with the AFA, it was found that the AFA was high than the hourly rate. In the year 2010, Harlow and the GELRT adopted a new technique for hiring GSK’s legal work which is the reverse-auction process. This process involved in issuing a request for proposal to the law firms in which the best firm had been selected after reviewing their recommendation.

Background

The legal industry has been undergoing a significant transformation during the past years. After the economic crises in the year 2008, the competition among the law firms increased and the loyalty among the clients had started to diminish with the law firms. The size of the law firms had been increasing 4% – 5% annually after the economic crises. In the year 2012, it was shown that the demand of the legal service had been on a decline.

The companies in UK and US spend around 4 – 5 million in its litigation costs for legal service in which 40% of the amount is spent by the healthcare companies. The companies are adopting various methods for managing and cutting its legal costs. Some of those methods are through creating a long-term relationship with its law firms for delivering the expected outcomes for being cost-effective.

Some of the GC of the companies are internally training resources for lower spending on the law firms and not outsourcing the law firms. Such training is conducted through the new performance measurement for improving the efficiency and productivity. Other GC’s are using the Alternative Fee Arrangement which includes a fixed fee, contingency fee rather than being billed based on hourly rates. The other method was through adopting the six sigmafor knowledge and project management in which eliminating the need for outside law firms which results in saving a lot of money.

Synopsis

GlaxoSmithKline is one of the sixth largest manufacturers of medicines and recognized firm worldwide,which is faced with a complaint due to a patient being died of anaortic aneurysm while using blood pressure medication. Sophia Keating who is the attorney in the legal department of GSK had been given the responsibility of selecting a law firm through using the reverse-auction system.

GlaxoSmithKline Sourcing Complex Professional Services Harvard Case Solution & Analysis

The company had been attempting to improve the procurement methods for outsourcing law firms in which the responsibility is given to the GELRT. The team had taken various initiatives through hiring new roles for analyzing on the six Sigma by hiring a project manager, analyzing the AFA through business analytic tools by a manager who is outside the council and hiring a legal analyst for analyzing the e-billing implementation.......................

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