Date: April 12, 2013 Topic: The Shrinking ... - Georgetown Law

These in-house legal departments carried out a ‘panel review’, and reduced the
number of preferred law firms as part of an exercise to reduce the overall legal spending. A
tighter control over external spending resulted in internalizing the plural sourcing balance.
Developing relational contracts with a smaller number of law firms has facilitated this. The
following quotes are illustrative:
Only three firms were chosen for the panel. I don’t let our panel law firms compete
against each other. What I mean by that is, if I have a piece of work, I don’t say to all
three of them, “Give me a price.” We tend to spread the work around, and we work
with each of them individually. We’ve got good relationships with each of them, and
it’s a non-confrontational approach.
Implications for theory and research
Our study has important implications for strategy theory. First, our study extends the
plural sourcing research by going beyond important but still basic questions of whether and
when firms engage in this practice to theorize about firm-level mechanisms, including
resource co-specialization and supplier selection, that determine the mix of sourcing modes.
Second, these co-specialization opportunities exist for resources lying in different
corporate functions. Thus, whilst our empirical context is the legal department as a focal
corporate function, other corporate functions also engage in plural sourcing by balancing
internal and external resources within the firm. In particular, in-house accountants work
alongside outside accounting and audit firms, in-house engineers with outside engineering
consultant firms, in-house marketing departments with marketing and PR agencies, and
internal strategy consultants with outside consulting firms. In these and other contexts, we
think our theoretical framework can provide researchers with relevant guides for making
inferences about make and buy strategies.
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