GSK P S

Introduction
The purpose of this report is to establish the challenges and how these challenges and issues
affect Gsk Rigor and what GlaxoSmithKline goes through in procuring legal services in the
United State (US). This report will conduct a situational analysis by using a strategic tool. This
report will also give suggestion and recommend some possible solution to the company.
Overview of the Report
GlaxoSmithKline (GSK) is a pharmaceutical company based in the UK that employs new and
innovative ways in sourcing legal service or counsel outside their jurisdiction. This new
approach replaces the company’s selection of relationship-based as well as the company’s law
firm’s initial time-based of billing with the new approach of using data in making decision as
well as the usage of online reverse auction. The company has been hit with a very disturbing suit
and needed a very competent law firm to respond in time for the company to deal with suit
adequately. The company sought the service of Sophia Keating a managing attorney. The
veterans of GSK promised her that their new approach will drive down cost as well as improving
the quality of work through a systematic increase of rigor within the procurement process.
Sophia unsure of the approach run the process orderly by comparing and analysis the firms bid.
The process as well depicts the manner in which the tools were made and adopted. Apart from
the consequence for other competing firms as well as other service providers.
Problem Statement
The woes of GSK started when they were sued on the death of Catherine Whitmore. She was
reported to have died from “an aortic aneurysm” at the time she was taking medicine from the
company to cure her blood pressure. As a result of the lawsuit, GSK needed the service of a law
firm that could file a response with the limited time of 20 days. The Vice President of the
company task the managing attorney of the company Sophia Keating to hire a law firm that
could file the defense within the stipulated time.
The managing attorney hire her old school mate with a lot of experience in dealing with such
issues as well as having highest of bid while taking notice of “Outside Counsel Selection
Initiative (OCSI)”. The company was aware of the consequence of not hiring a counsel in time
as they are sure of losing the case should they delay in filling a response. Sophia with the limited
time in mind needed to hire a firm by developing and managing her on portfolio setting aside the
“Outside Counsel Selection Initiative”.
Issues faced by GSK
The issue of Cost
Most companies in the UK and US started to implement strategies that will help them reduce
cost after the 2008 economic recession. A maximum of over 70% of the firms in these two
countries spent a maximum of five million dollars on litigation. A total of 30 to 40% of these
spending were in the health sector. These forced the management in the health sectors to check
or curb the spending. GlaxoSmithKline like other companies in the health sector was force to
look into their legal expenses. In scrutinizing their legal expenses, the company uses various
approaches and steps to curb the cost of their legal activities. In the process of reducing cost,
GlaxoSmithKline abrogate their relationship with all legal firms in order to seek the services of
external counsels as it is considered to be less expensive. Also, in another approach to reducing
cost some heads of the legal teams move their works to less expensive but more efficient firms as
well as suppliers of non-traditional legal service like outsourcing for law firms overseas.
The general counsel of GlaxoSmithKline also installed electronic billing system known as e-
billing system and sought the services of legal experts and data analyst to monitor the amount
spent of legal services. The company also started internal training to acquire better purchase and
making a decision that will limit the lifecycle of cases to reduce amount spent on legal services.
The Issue of Decentralizing the System of Management
GlaxoSmithKline in 2008 sought the services of Troy Dan. Troy Dan was hired as a general
attorney of the company. The services of Troy was sought because the company was not able to
determine its legal spending. The company due to the decentralization of the management system
was not able to tell amount spent on legal services. The company had several million dollars
litigation issues leading to huge legal spending before Troy assumed his position in the company.
Troy after joining the company centralized the system of management of GlaxoSmithKline legal
spending. In doing so, he formed a team known as “Global External Legal Relations Team
(GELRT)” within the company’s legal department. This he did to change the way the company
pays for its legal services.
GlaxoSmithKline New Procurement Process
The company after several attempt to change the procurement method used by all departments to
the legal department proved futile. The company in 2005 decided to try their final by assigning
the task to Marty Harlow. Marty Harlow had a maximum of 25 years’ experience in
procurement. However, Marty Harlow had not experience in legal experience, this he said was a
result of procurement wasn’t involved in legal issues. Marty Harlow was assigned to understand
and know the selection and the relationship as well as the management practices employed by
the legal team of the company. He conducted several interviews and come up with new ideas
about the outside hiring of legal service providers.
The general counsel supported the idea of Harlow and he was teamed up the procurement savvy
department within the company’s law department to oversee the new procurement process.
Harlow looking at the slow pace of the law educated himself on the department as well as the
legal issues pharmaceutical companies needed to look at.

Recommendation
As procurement experts in an organization, GSK has several roles and work to do within the
company’s legal departments. When it comes reducing legal expenses and getting external
procurement experts, company must pay attention paying less by using other means of seeking
legal services like targeting ancillary services. The company must also use less legal service
providers by redirecting some work to in-house legal team.

Reference
https://hbr.org/product/glaxosmithkline-sourcing-complex-professional-services/414003-PDF-
ENG
https://caseism.com/glaxosmithkline-sourcing-complex-professional-services-2-55856

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Introduction

Overview of the Report

could file the defense within the stipulated time.

“Outside Counsel Selection Initiative”.

Issues faced by GSK

The issue of Cost

external counsels as it is considered to be less expensive. Also, in another approach to reducing

The Issue of Decentralizing the System of Management

pays for its legal services.

GlaxoSmithKline New Procurement Process

about the outside hiring of legal service providers.

legal issues pharmaceutical companies needed to look at.

providers by redirecting some work to in-house legal team.

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