Red Team Memo

In Spring 2023, our close contacts at a Global 50 law department asked us to write a ‘red team’ memorandum pointing out the potential pitfalls in a planned panel refresh.

Red Teaming

We were correct in our prediction.

Our contacts were correct in their decision to not pass on the memo. An anonymized version of the memo is below. Or you can download it if you prefer a more traditional reading experience.

We wrote the memo.

But when we delivered the memo, we expressly predicted our contacts would not pass it onto the rest of the executive leadership team. We observed that for the truth to be palatable it would need to be watered down to the point of drowning.

We were correct in our prediction.

Our contacts were correct in their decision to not pass on the memo. An anonymized version of the memo is below. Or you can download it if you prefer a more traditional reading experience.

The Road Not Taken

An alternative path for preferred-provider programs


Anonymity limits the details we can share.

Suffice it to say, the requesting law department had already done all the things when it comes to outside counsel management. Convergence. Preferred provider panels. Discounts. Alternative fee arrangements. Reverse auctions. Value adds. Matter-level RFPs. Matter budgets. Outside counsel guidelines…all the things. With spectacular results, btw.

If some is good, more is better, no? New department leadership was interested in building on the success of the preferred provider program by doing all the things, again.

Preferred Provider Panels

Our contacts immediately identified the issue: the traditional levers of reducing spend with outside counsel are subject to diminishing returns—done correctly, many are one-time lifts.

Our contacts also immediately identified the politics: sharing this uncomfortable truth would not land well with new leadership, who lacked not only the historical context but also the bandwidth to be brought up to speed—as is often the case, they wanted wins on the board ASAP and expected their direct reports to deliver on these dictates.

In a pickle, our contacts needed someone knowledgeable enough to articulate why doubling down was unlikely to double the results and stupid enough to say the quiet parts out loud. So, basically, Casey.


Casey wrote the red-team memo. But, turns out, the quiet parts are quiet for good reason. When you lay out what is required to push beyond the traditional modes of buying and delivering legal services, the conversation becomes real uncomfortable real quick.

It is all in the memo. In summary, law departments and law firms will need to do that which they were never designed to do: solve for scale. This requires re-engineering for which there is neither budget nor appetite. It requires fundamentally changing the relationship between the law department and the business. Infinitely easier said than done.

Solve for Scale

While the memo was not passed on, the effort was not wasted. Our contacts used the palatable pieces to make their case within the political constraints of their organization. We strongly warn against self-righteousness in assessing the decision about how much was shared. We should trust that people know their own organizational context. Compassion should be the default.

We live in the most exciting of times. But we also live in the most challenging. The era of stability is over. Many hard choices need to be made, including which battles to fight and when.

Contacts making their Case
Preferred Provider PanelsPoliticsSolve for ScaleContacts making their Case


The recommended external resource management program would be new. New is unfamiliar. Unfamiliar usually demands some detail. The full memo is quite dense. The one-page Overview and one-page Summary are designed to be digestible. These, however, are followed by long, explanatory sections meant to be skimmed. The sections present the reasoning behind the program.

In an information economy, attention is the scarcest commodity. We never expected the memo to be read in full by most. Rather, the body of the memo is reference material made available to answer specific questions raised by the Overview/Summary.


A panel refresh is unlikely to deliver significant near-term savings, let alone bend the legal cost curve over the long term.

[REDACTED] has already established itself as a leader in leveraging purchasing power to secure below-market rates for legal services. Yet while extracting rate concessions and imposing budget discipline produce measurable benefits, these cost-control methods are subject to diminishing returns. There is little, if any, room for most incumbent providers to further maneuver on rates subject to the constraints of their own commercial imperatives.
Given the trajectory of law-firm rates, [REDACTED] will likely face a choice between
(i) paying higher rates to incumbents or
(ii) switching to lower-cost providers.

Moreover, rate recalibrations resulting from moving work to lower-cost providers will still not result in an inflection point in the upward slope of overall legal spend. Indeed, even if a material shift in the organizational attitude towards new hires permitted aggressive insourcing, bringing work in-house would, at best, also only offer temporary relief.
Fundamentally, business needs for legal support are increasing faster than the resources available to meet those needs. Long term, labor arbitrage is insufficient to close the gap. Labor inexorably becomes more, not less, expensive. While there are near-term gains to be captured from re-allocating work to more cost-effective labor. the lower unit cost is invariably insufficient to overcome the increased workload (i.e., more units). You spend less than you could have but, from the perspective of the business, still more than you should have.
Right sourcing is necessary but not sufficient. Once work is allocated to the most cost-effective labor at market rates, the only spend-reduction levers remaining are

(i) eliminating legal needs,
(ii) decreasing the labor intensity of legal service delivery, or
(iii) leaving some legal needs unmet.

Higher business velocity in an increasingly complex legal operating environment ensures that the business’s legal needs will expand, not contract. Not meeting business needs is patently unacceptable. Thus, the only viable path is a reducing labor intensity—i.e., scaling the delivery of legal services.
Better external resource management is essential to solving for scale. But, in this context, “better” means more than lower rates. Better requires buying differently. In addition to substantial change management, better would demand patience because much of the ROI would be delayed. Thus, far easier said than done.

Scaling legal service delivery is genuinely hard. Success cannot be guaranteed. But satisfying ever-intensifying business needs through traditional means without a proportionate increase in resources is impossible. Failure is inevitable absent a meaningful structural shift. That is, either you bet on your own capacity to change or you bet you can muddle through until some massive external change makes it so you don’t have to.



The evolution of the preferred-provider program would result in a four-part structure, two prongs of which would be mostly new:

01 Portfolio

Strategic partnerships for large portfolios of work on predictable fees with declining unit costs built into multi-year contracts.

02 Panel

Internally vetted providers for work too inconsistent for portfolios but sufficiently frequent and business critical to merit mutual investment in panel relationships.

03 Marketplace

Searchable database of externally vetted providers for novel and infrequent work that falls outside portfolio or panel relationships.

04 Extraordinary

Work with such significant business impact it warrants identifying and vetting firms not already onboarded through portfolio, panel, or marketplace arrangements.


Extraordinary exceptions (#4) are already available for step outs from the current panel (#2). The evolution would therefore be:
  • Systematically packaging meaningful tranches of work and entering portfolio-level arrangements geared towards solving for scale. Importantly, portfolios can be packaged over time—every portfolio need not be implemented immediately nor simultaneously—and are not limited to traditional law firm relationships (e.g., Integrated Law).
  • Reducing the number of smaller panel arrangements and enabling the marketplace to absorb less frequent panel work because panels naturally skew towards larger, more expensive firms and the effort required to offset this skew—i.e., enlarging the panel—reintroduces variants of the administrative burden the panel was created to redress.


The primary objective is always to enable the business at scale and pace. The supporting objectives are to do so cost-effectively and sustainably. To further these core departmental objectives, the project objectives for transforming the preferred-provider program as outlined are:
  • Solving for scale. Reducing the ratio of legal resource inputs to business outcomes—not merely reducing the unit cost of legal labor (i.e., insourcing, discounts).
  • Right sourcing. Ensuring capped internal headcount is directed to its optimal use while external legal labor reflects the proper mix of expertise and price level.
  • Reducing administrative friction and refocusing administrative resources. As the program matures, re-allocating attention from ‘who’ gets the work to ‘how’ the work gets done.
  • • Reframing DEI efforts. Centering the hiring and career progression of diverse professionals despite tradeoffs with other objectives (e.g., reducing administrative burden, maximizing savings).
  • • Revisiting the entire value chain and utilizing all levers to drive cost-effectiveness. Taking a total-cost-of-ownership perspective grounded in business value.