How Legal Spend Management Systems Improve GC-CFO Collaboration
In the business world, there’s a long-standing truth: A company’s success is often highly contingent on how well its C-suite works together. And there are few areas where the dynamic between executives is more impactful than in the relationship between the General Counsel (GC) and the Chief Financial Officer (CFO).
If you’re a GC, this won’t come as a surprise. The valuable legal and strategic advice that GCs provide guides CEOs, COOs, and the rest of your senior leadership colleagues toward sound commercial and operational decisions. And the financial implications of that advice have no doubt been stress-tested by your CFO.
This alignment becomes important during high-stakes moments (such as mergers and acquisitions, or when handling new regulatory issues) and when handling day-to-day matters. Decisions from legal needs to support the company’s financial objectives, and finance needs to back the systems and processes that help legal operate efficiently.
How do you navigate all of those complex layers? It comes down to fostering a solid partnership between roles. Here’s how to do it well—with the help of a robust legal spend management system.
How Modern Pressures Are Reshaping GC and CFO Roles
First, a caveat: today’s business environment demands more of both roles than ever. Companies face constant shifts in regulation, and an ever-more-competitive financial landscape.
For CFOs, this means the rest of the C-suite demands a higher level of performance than ever before — more proactivity, better cost control, stronger reporting, and accountability. Meanwhile, GCs are expected to provide nuanced advice that not only improves legal outcomes but also supports financial imperatives.
In other words, both departments, in addition to their day-to-day responsibilities, are increasingly expected to serve as strategic partners to the broader business.
That can create some conflicting pressures, especially when it comes to the legal department budget. But it doesn’t have to cause tension. What it does mean is that GCs and CFOs have to work together to make decisions based on objective facts. Experience and intuition absolutely have their place, but they can’t be the be-all and end-all of strategic decision-making.
The Increasing Importance of Data in Financial Decision-Making
As these pressures mount, both CFOs and GCs are recognizing the need for better data and business intelligence. In fact, according to PwC’s recent Pulse Survey:
- 57% of business executives say they’re missing opportunities because of slow decision-making
- 58% of CFOs are investing in AI and advanced analytics to drive better financial outcomes
Meanwhile, in-house legal teams see the same benefits of technology in advancing operational efficiency and controlling costs. Many are turning to AI and analytics to meet these goals, but, according to a recent Axiom survey, 78% of legal budget decision-makers said they lack of dedicated budget to implement these tools.
The root of this disconnect often comes back to data: legal teams need to be able to prove the ROI of tech investments quickly. For that, they need real legal operations insights, as well as buy-in from finance and the CFO.
Why Legal Teams Need a Dedicated Legal Spend Management System
Here’s the core problem: many of the tools legal teams use don’t automatically provide insight into efficiency gains or cost savings. Technologies like GenAI, for example, can and do improve outcomes, but your in-house teams still need to measure those improvements to prove value. After all, it’s tough to justify your tech investments if you can’t show the CFO how they contribute to the bottom line.
This is where platforms like Brightflag come in. These platforms are purpose-built for corporate legal teams. As a result, they far surpass the capabilities of other accounts payable or business spend management software when it comes to keeping a system of record for legal spend.
Using AI and advanced analytics, dedicated legal spend management platforms like Brightflag offer granular insights into spend through clear, focused dashboards. This, in turn, makes it easier to report on spending, allowing teams to easily show where the legal budget is allocated and discuss options for managing it more efficiently.
The integration of AI also frees up a significant amount of legal administrative time. For example, automating manual tasks, such as legal invoice review, ensures that in-house legal professionals can focus on higher-value and more strategic tasks.
The net result is a system that speaks the language of both GC and CFO. One that:
- Clearly documents and tracks legal spend
- Makes it much easier for finance to understand legal’s budget needs
- Allows the GC and CFO to align on where savings can be actioned and how to structure the legal budget
Structuring Legal Spend More Effectively with Your CFO
Proving to the CFO that the legal tech your team is investing in (or wants to invest in) will help improve legal spend management is just the starting point. It’s also essential to ensure legal and finance are on the same page around the challenges specific to legal budgeting.
To ensure alignment, there are certain core principles worth keeping in mind when communicating costs to your CFO:
- Ensure you have an accurate record of your current year’s legal costs
- Define your expected future expenses and projections
- Clearly outline how costs align with the legal team’s strategy
- Show how legal spend is likely to align with the broader business strategy
- Ensure the CFO understands that unexpected legal costs do arise (like unplanned litigation)
Other points to clarify include:
- Does the software you’re using provide reports in the format needed by the CFO?
- How granular should tracking be?
Approaching the legal budget with this kind of framework means that your legal department’s reporting is already prioritizing what your CFO needs to know to make informed decisions.
Importantly, you should also ensure the CFO understands that, while unexpected legal costs will always arise, a proper budgeting and reporting tool can help you anticipate them more accurately. Along with the impact they’re likely to have on the budget.
GCs and CFOs: Blending Strategic Partnership with Corporate Guardianship
As this blog demonstrates, CFOs and GCs must meet the same obligations, particularly when it comes to data-driven decision-making. They also have a very similar mission: making the best decisions possible to support their company. The result is a natural partnership.
GE’s former General Counsel Ben W. Heineman Jr. had a good perspective on this. He calls it “partner-guardian fusion”.
Writing in the Harvard Business Review, he says: “The CFO and GC must manage a dynamic tension: acting as ‘partners’ to the board of directors, the CEO and top business leaders, but also, ultimately, as ‘guardians’ of the corporation.”
Meeting that challenge successfully means using all the tools at your disposal — starting with the right legal spend management system.
How Brightflag’s Legal Spend Management System Supports the GC-CFO Partnership
Here are six ways Brightflag helps you forecast your spend and hold up your end of the CFO – GC partnership:
- Provides legal, finance, and procurement teams with bespoke reports on legal spend and key matters with more detailed data than any accounts payable (AP) software.
- Improves your ability to forecast legal team budgets with accruals tracking for work done by outside counsel
- Automates outside counsel invoice review, down to individual line items, using A.I. technology. This lets your lawyers spend more time providing trusted advice than on administrative tasks
- Acts as your central command center for matter management across your legal team with up-to-date status reports, matter budget tracking, resourcing data, and more
- Gives AP the flexibility to batch export approved invoices or build bespoke integrations for automated workflows
- Flags non-compliant charges based on your outside counsel guidelines for better cost control
With all of that in place, managing the legal department budget becomes a whole lot easier. And the relationship between GC and CFO becomes what it was always meant to be: a true strategic partnership rather than just “GC reporting to CFO”.
Interested in how Brightflag can make this happen for your team? Book a Demo.
Legal Spend Management System FAQs
Why Does a Legal Team Need a Dedicated Legal Spend Management System Instead of AP or Spend Tools?
A dedicated system helps track legal spend accurately, focusing on the most critical factors for the legal department. It also simplifies reporting for better collaboration between legal and finance.
What Reporting Capabilities Do CFOs Typically Expect from Legal Teams?
Ideally, the legal team should be able to quantify both current and upcoming expenditures, along with the specific budget being allocated. This granular view into legal department finances enables CFOs to plan their own reporting and ensures that broader business budget projections are accurate.
How Does a Legal Spend Management System Support the GC–CFO Partnership?
A legal spend management system enables the GC and CFO to align on budget priorities and understand how these priorities support business objectives. It also shifts the relationship away from the typical “GC reporting to CFO” framework to a partnership focused on corporate guardianship.
What Are Signs That We’ve Outgrown Manual Budgeting or Spreadsheet-Based Legal Spend Reporting?
To be frank, in today’s fast-paced business world, few teams can afford to take a manual approach. If your team is still spending a significant amount of time on manual budget administration and reporting, they’re missing opportunities to contribute strategically to the business. A solid legal tech foundation makes it significantly easier for your team to both manage their budget and demonstrate business value.
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