Legal Department Software

One of the most common use cases for legal department software is establishing a system of record for all matters.

Matter management software brings together all of the key matter participants, including internal attorneys and outside counsel, and provides a structured system for capturing and storing information about the matter.

Although there are common pieces of information that all legal departments will want to capture—for example, the name of the matter, a unique identifier, and the practice area—each organization will also have its own unique needs. For example, a technology company may want to track the specific product capabilities that require intellectual property work, whereas a quick service restaurant chain may want to track information about individual restaurant locations. Whatever the need, modern legal department software gives the ability to easy configure the matter management system to collect this information and make it available to the lawyers.

Of course, the matter management capabilities must ensure that each member of the legal department has access only to the relevant information. Typically the Chief Legal Officer or General Counsel will have access to all matters, department leads will have access to their practice area’s matters, and individual attorneys will have access only to the matters on which they’re working. Integration with single sign-on and identity management systems help to meet this need while complying with enterprise IT requirements in the legal industry.

Money is the language of business, and in order to get a seat at the executive table, the General Counsel needs to speak it fluently. Legal department software can help General Counsel to establish a strong foundation of fiscal discipline and responsibility. The first step in achieving fiscal discipline is to foster a culture of budget accountability. Brightflag helps legal teams to do this in two ways.

First, budgets can be established top down: for the entire organization, for an individual practice area, for an individual geography, and so on. These budgets are set for a fiscal year. When these budgets are created, Brightflag automatically captures all approved spend, pending spend, and accrued but unbilled spend, and shows the performance against budget, all on demand and in real time. In doing so, Brightflag eliminates the need to maintain any spend and budget spreadsheets, and removes the dependency on finance to produce spend reports.

Second, budgets can be set for individual matters, which is a best practice for ensuring accountability for the practicing attorney as well as the legal department’s outside counsel partners. Using Brightflag, budgets can be set for the life of a matter, for individual phases of a matter, and/or for individual months and quarters.

Using Brightflag, in addition to being able to report on spend versus budget at any time, invoice reviewers will also be proactively alerted when a budget is being approached or exceeded. This empowers everyone in the legal department to play a more active role in controlling costs.

Finally, Brightflag uses artificial intelligence (AI) and machine learning to forecast what the year-end spend is likely to be. This is done based on an analysis of the work being performed by law firms, and the number and complexity of matters being created.

Legal invoice review is the final step in controlling spend, but is rarely done well. So much of legal invoice review is repetitive:

• Does the invoice conform to the legal department’s billing guidelines?
• Are the total fees within the budget?
• Have the correct timekeeper rates been applied?
• Is the invoice addressed to the correct entity, and in an allowed currency?
• Has tax been assessed correctly?

With Brightflag, this work is done by AI, increasing invoice review accuracy and freeing the in-house team to focus on high-value activities. Brightflag’s AI creates a summary of which timekeepers did what work—just like an experienced lawyer would, but automatically and in seconds. Reviewers can easily drill down into components of the invoice to validate that the proposed charges are appropriate given their instructions. This ensures that every invoice is reviewed with the same level of rigor, regardless of whether invoices are in LEDES, PDF, or scanned format, driving significant cost savings and increased productivity.

Many legal departments wish to bypass invoice review altogether, particularly for smaller and more straightforward pieces of work. In this case, legal department software can be used to fully automate the process. For example, invoices that are under $10,000 and don’t violate any billing guidelines can be automatically approved and sent to accounts payable. This saves even more time for the practicing attorneys.

Most legal departments rely on email to engage with their business stakeholders. Someone needing help from legal may email a particular in house counsel who they know, or there may be a general inbox that people are directed to. But regardless of the exact setup, the result leaves much to be desired, because it lacks visibility, transparency, and a robust audit trail.

Legal department software like Brightflag helps to address this problem by providing out-of-the-box features for legal service request intake and triage. Using Brightflag, legal departments can define any number of types of request—contract review, employment dispute, real estate negotiation—that the business may have. For each type of request, the legal team can specify which pieces of information they need in order to act on the request, and give their business stakeholders the ability to provide that information in an easy-to-use form, along with supporting file attachments.

When a request is received, the software automatically routes it to the right person on the legal team, who can review the request, add information if necessary, and optionally convert it to a matter, at which point it can be worked on as normal.

The benefits of legal service requests are numerous. First, the business knows where to go to request help, and has an easy way to check on the status of a request. Second, the legal team is able to get out of their inbox and into a structured system of record that organizes all of the relevant information. Third and most critically, it gives legal leadership visibility into the volume and nature of requests that their department is fulfilling, which helps to communicate the value of legal to the rest of the executive team.

Many corporate legal departments have a panel of law firms or outside counsel on which they rely most often. Sometimes this is a formal panel, with membership reconsidered every two to three years, and other times it’s informal. Legal department software helps in-house teams to formalize and strengthen a preferred provider program, which helps to increase the consistency of legal work and control costs.

Brightflag provides out-of-the-box reports so that legal leadership, legal operations, and procurement can compare vendors to one another and understand which is delivering the best value for money. Best practice vendor evaluation includes three components, each of which is supported by Brightflag:

• Cost assessment: How much is each vendor charging for similar work? How effectively is the vendor resourcing each matter? To what extent does the vendor comply with outside counsel billing guidelines?
• Quality assessment: At the conclusion of each matter, Brightflag automatically sends a short survey to the instructing in house counsel to assess the vendor’s performance based on responsiveness, understanding of needs, and so on. This data can be compared with costs to understand the relative value receive.
• Diversity: Brightflag includes specialized, privacy-aware capabilities to collect information regarding the diversity of each law firm’s timekeepers, helping corporate legal departments to understand to what degree their outside counsel partners are living their values of diversity, equity, and inclusion.

What’s more, Brightflag’s customer success and customer insights teams engage directly with customers to help them leverage this data to develop the best preferred provider program. One of the most common things we hear from customers is that the only thing better than our software is our team!

Modern legal spend management software provides all the capabilities in-house teams need to replace their manual rate management processes with an automated, software-based approach. Using Brightflag, outside counsel can submit their rate cards for pre-approval. Only after a rate is approved can the law firm submit an invoice, and Brightflag confirms that the rate charged on the invoice is no greater than the approved rate; if it is, the invoice is rejected for correction or automatically adjusted.

Brightflag also puts procurement in the driver’s seat to compare the true cost of legal services over time, so that they can better negotiate hourly rates. Using the out-of-the-box Blended Rate by Vendor report, you can quickly see the effective price you’re paying and identify worrisome trends. As an example, as the Covid pandemic emerged in early 2020, many Brightflag customers used this report to identify a trend towards increased partner involvement in their matters. This was a fee-maximization tactic employed by a handful of law firms that customers were able to identify and correct because of the visibility created by Brightflag.

Put simply, an alternative fee arrangement (AFA) is any outside counsel engagement that is not based exclusively on an hourly fee. Corporate legal departments are increasingly looking for ways to leverage AFAs more broadly, because they can provide greater predictability of legal spend, as well as better align fees with outcomes.

Brightflag supports and enforces the following fee models:

• Hourly fee per named timekeeper
• Hourly fee per timekeeper role (associate, partner, etc.)
• Blended hourly fee (all timekeepers charge at the same rate)
• Hourly fee with cap
• Fixed fee for a matter
• Fixed fee for a matter phase
• Fixed fee for an activity

Multiple fee models can be applied to a single matter.

Brightflag’s unique, patented AI technology creates a comprehensive data set that corporate legal departments can use to identify opportunities to leverage AFAs. For example, legal operations leaders can use the data to identify repetitive areas of work that have a predictable cost, and negotiate a fixed fee for this type of work. This brings predictability to spend but also has efficiency benefits, because fixed fee invoices don’t need to be reviewed by lawyers prior to payment (or if they do, the review can take considerably less time than if the invoice were submitted on an hourly fee basis).

Accruals, often called unbilled estimates or work in progress, are of critical importance to accounting. Particularly for publicly traded companies, finance teams need to know how much expense the organization incurred within each month, so that the financial statements are accurate and the business complies with all relevant regulations. Without corporate legal department software, legal spend is often accounted for incorrectly, leading to unwelcome surprises after the financial statements have been closed.

Brightflag makes the accruals process easy for legal teams and their partners in finance. This includes:

• The ability to configure the frequency of accruals, e.g., monthly or quarterly
• Automatic notification to vendors assigned to active matters to submit accruals (including reminders)
• Automatic notification to in-house team members to review and approve submitted accruals
• Automatic submission of approved accruals to finance systems of record
• Incorporation of accruals into reporting on spend versus budget
• Reporting on approved accruals versus actual spend

Because the Brightflag legal software is role-based, finance partners can be given direct access to the accruals reports, allowing them to self-serve without having access to potentially sensitive information about the legal work being done.