How Legal Teams Increase ROI from Outside Counsel Spend
The 3 Steps that Corporate Legal Teams take
- The dream of legal spend ROI
- Seeing legal spend clearly
- Controlling legal costs
- Acting on data insights
Corporate legal teams face unique challenges.
Imagine you are part of a legal team with an annual external legal spend of millions. That can correspond to thousands of invoices from law firms annually. That’s hundreds of thousands of narrative line items. A real mountain of invoice data. This legal team needs to be able to process all of this, control costs, while working matters in collaboration with their law firms. No pressure, right? Well, cost control and efficiency are only possible when you can analyze all of your legal spend data and then use it to make clever human decisions.
Historically, this has been a chore. If you’re an in-house lawyer, you know all about it. Boring line-by-line invoice reviews. Endless email queries. Subjective judgments about whether this firm or that firm is billing too much for prohibited costs. And fraught conversations with outside counsel relationship managers based on shaky figures and selective intuition.
If you’re a General Counsel, what’s the opportunity cost of this invoice review?
When legal departments do manually collate and analyze the data mountain, days and even weeks of staff time get lost. Even after all that manual, demotivating administrative work, legal departments are often left with an analysis that is patchy and unclear.
The dream of legal spend ROI
We know and you know that none of this is the law firms’ fault though. The nature of legal work means it can be challenging to give an accurate fixed fee estimate or budget. Look at GDPR in the European Union. A national banking sector inquiry in Australia. Or the regulatory uncertainty caused by Brexit. So, legal work’s complexity has understandably made cost control a major challenge.
It’s no wonder that legal teams hunger for an overall cost control strategy, to drive a better ROI for the organization. What’s been really interesting for our team here at Brightflag is seeing how the companies that work with us are creating tailored strategies to get ROI on legal spend.
1. Seeing legal spend clearly
Here’s how. One of the first things we’ve seen our clients do is get an accurate picture of what they are spending, who they are spending it with, and how effective their outside counsel billing guidelines actually are. When you get high-level, real-time visibility of legal spend, it opens the door to change. It now seems you can climb to the summit of that data mountain to get a clear view of the legal landscape. From this vantage point, corporate legal departments are sharpening approval workflows with a mix of automation and lawyerly judgment that is based on reliable figures.
2. Controlling legal costs
From here, we’re seeing large corporate legal teams use tidy visual data to actively manage legal operations with clear billing, performance, and trend data based on firms’ own invoices. This is exciting. Because there’s always been tension in having to remove Divo challenge a longstanding partner firm about its invoicing. Because the relationship is of so much value to everyone involved, friction has understandably been created. Now, A.I. driven data has created a safe zone where in-house and outside counsel matter leads can have honest and mutually beneficial discussions.
What is most impressive about how our clients are using our platform is their ability to act on the compounding intelligence it provides, as quarters roll into years.
3. Acting on data insights
Our clients are looking at their bespoke legal spend analytics, aggregating all of that individual analysis of potential savings to start understanding the total savings that are actually being realized. Take litigation work. Here, they are comparing similar historic matters, understanding case assessment costs, pretrial pleading costs, and discovery costs. With this data, they are negotiating better fee arrangements at the macro level, but also at a phase level for each of the phases we just mentioned. And where they are continually spending for outside counsel, they’re taking stock of recruitment.
Can matters be handled internally if there is a subject matter expert or should we bolster our in-house team? Or are their specific areas of legal work which your law firms’ excel in? These questions now have an evidence base.
What’s common across all these ROI strategies, is that clever human-decision remains a driving force. It’s just being better enabled by A.I.