How Gaining Visibility Into Legal Spend Transforms the General Counsel Role

Prioritizing Legal Spend Analysis

To say that everything a general counsel wants is on the other side of financial discipline would be stretching the truth—but only slightly. Because among those who have carved out successful and satisfying careers, most mark it as the key inflection point.

So if you’re searching for a single area of focus with the greatest potential to transform your trajectory, it’s hard to argue against legal spend analysis.

Transforming In-House Efficiency

Lasting changes usually start from the inside out. So let’s begin by looking at a few ways your financial skill development could impact the in-house legal team.

Optimize resource allocation

Before you can change anything for the better, you first need an accurate understanding of where things stand today. And since we’re all somewhat unreliable narrators of how our time and money are truly spent, it’s best to rely on a more objective observer.

Legal spend analytics tools counter our natural biases by simply following the money. No drama. No doubt. Just the quantified truth.

Will you be surprised by what the data reveal? You wouldn’t be the first. Most GCs immediately spot a few obvious outliers and inefficiencies that they’d like to resolve.

But even if you see that all internal and external resources are appropriately balanced, you’ll still need this baseline perspective to help evaluate future plans. Legal spend analysis creates the scoreboard to confirm whether you are trending closer to or farther from a sustainable resourcing strategy.

Instill financial accountability

What gets measured gets managed. So when a GC starts capturing and analyzing a more detailed portrait of financial performance, internal matter leads have a funny way of delivering superior cost efficiency.

That’s not to say your in-house lawyers aren’t already diligent financial stewards. It’s just that the deeper data sets generated by today’s legal spend analytics tools are helping departments understand costs more intimately and apply controls more precisely than ever before.

Develop a data advantage

The ultimate payoff of smart legal spend analysis is stronger positioning in strategic scenarios.

• Need to justify your proposed budget to the CFO?
• Need to negotiate a more favorable rate from a firm?
• Need to know which cost drivers to focus on next quarter?

Data puts you on the trail to an answer sooner and gets others on board with your proposed solution faster.

Transforming Outside Counsel Relationships

After strengthening your financial fundamentals internally, it’s time to consider leveraging legal spend analytics externally.

Evaluate performance objectively

Using analytics to establish a more objective means of measuring financial performance immediately improves the dynamics of outside counsel relationships.

Law firms will learn what you expect and value in a fraction of the time. Plus, they’ll feel reassured that you’re evaluating their services with a consistent, transparent, and unbiased rubric.

This upfront clarity and accountability naturally encourage and incentivize the traits you’d like to see from law firms. And they enable you to quickly advance toward the agenda item both sides would prefer to focus on: legal strategy.

Establish benchmarks

The overwhelming value of measuring outside counsel performance objectively for each firm is that eventually you’ll be able to make valid comparisons between firms.

This benchmarking data will give you the confidence and leverage to make more effective decisions at all phases of an engagement, including:

• Law firm selection
• Matter resourcing strategy
• Fee negotiations & AFA proposals
• Panel review & consolidation exercises

And it’s quickly becoming the asset that helps GCs shift from wondering what could happen to declaring what should.

Prescribe pricing

One powerful application of law firm benchmarks is pricing.

• How long should a matter like this typically run?
• How should we divide the budget across phases?
• How should we allocate the work among timekeepers?
• The more granular your legal spend analytics, the more confident you can be when proposing answers.

This proactive approach will almost certainly shape better financial outcomes for the client, in the aggregate. But it’s also worth noting that law firms stand to gain as well. They want and need clear direction upfront.

Hidden budget constraints or unreasonable fee expectations, for example, are two variables that could derail any client strategy if discovered months too late. So your data may even be what insures outside counsel against costly misalignments.

Transforming C-Suite Perceptions

In the end, legal department value is in the eye of the executive team. Expert legal spend analysis creates a positive perception in at least three ways.

Clarify accounting

In-house legal teams have historically faced a steeper challenge than any other business department when it comes to confirming how much money they spent where. The complexities of corporate legal services just don’t lend themselves to simple spreadsheet summaries.

With analytics tools specialized for legal spend management, however, you’ll be in a much better position to accurately report and confidently defend your numbers to the rest of the boardroom.

Spend distribution by practice area. Budget adherence by vendor. Accruals vs. actuals. For general counsel, legal spend that is presented using these kinds of financial metrics is the price of admission for an equal voice in the company’s most strategic conversations.

Underscore impact

You can’t be shy about sharing your accomplishments when trying to transform opinions, but they need to be communicated in a language your business colleagues will respect and understand. Namely? Money.

Did you resolve a matter months ahead of schedule? Help everyone else appreciate the significance of that result by modeling the costs your company would have incurred if the matter ran another quarter or two.

Did you recently complete a panel refresh exercise? Make it more universal by using benchmark data to contrast cost-efficiency between the old cohort and the new.

Whatever shape your victory takes, legal spend analytics tools can give you the data needed to ground the story.

Predict outcomes

Transforming C-Suite Perceptions

In the end, legal department value is in the eye of the executive team. Expert legal spend analysis creates a positive perception in at least three ways.

Clarify accounting

In-house legal teams have historically faced a steeper challenge than any other business department when it comes to confirming how much money they spent where. The complexities of corporate legal services just don’t lend themselves to simple spreadsheet summaries.

With analytics tools specialized for legal spend management, however, you’ll be in a much better position to accurately report and confidently defend your numbers to the rest of the boardroom.
Spend distribution by practice area. Budget adherence by vendor. Accruals vs. actuals. Fluently discussing these kinds of financial metrics is the price of admission for any GC hoping for an equal voice in the company’s most strategic conversations.

Underscore impact

You can’t be shy about sharing your accomplishments when trying to transform opinions, but they need to be communicated in a language your business colleagues will respect and understand. Namely? Money.

Did you resolve a matter months ahead of schedule? Help everyone else appreciate the significance of that result by modeling the costs your company would have incurred if the matter ran another quarter or two.

Did you recently complete a panel refresh exercise? Make it more universal by using benchmark data to contrast cost-efficiency between the old cohort and the new.

Whatever shape your victory takes, legal spend analytics tools can give you the data needed to ground the story.

Predict outcomes

Nothing can elevate a GC’s boardroom profile quite like a reputation for predicting the future. And at least in the realm of legal spend management, that seeming superpower is more attainable than you might think.

Referencing historical benchmarks can get you at least halfway there, helping you set only realistic goals you feel confident committing to. Real-time reporting capabilities can push you the rest of the way, providing continuous feedback on whether your stated goal might be at risk.

This is the thinking behind Brightflag’s AI forecasting solution, for example. Our analytics project the likely date of a budget overrun and alert customers while there’s still ample time to consult financial stakeholders and change course if necessary.

Equipped for Success

The quality of your technology will always be a limiting factor when the task involves quantitative analysis. So come see what the latest innovations in legal spend management could mean for your team, panel, company, and career!