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This post was originally published in October 2018 and verified in September 2023.
So, you’re a skilled lawyer working for a small (or solo) law firm - though it may be tempting to assume your...
As a solo or small firm attorney, managing your law firm's budget is a crucial aspect of running a successful practice. Staying financially sound allows you to focus on serving your clients without...
Corporate legal professionals have worked under the mantra of “do more with less” for years, but this chronic challenge appears to have reached a new height. From the global uncertainties associated with the occasional resurgence of COVID-19 to rising geopolitical risks and trade tensions, corporate executives are holding the line on legal cost containment even as they ask the corporate legal team to take on greater responsibilities.
In fact, nearly 9 in 10 general counsel report they are planning to reduce the overall cost of the legal function over the next three years — with pressure from the CEO and board ranked as the number-one reason — while they simultaneously expect their department workloads to increase by 25% over that same time frame, according to the 2021 EY Law Survey.
These two strategic objectives may seem to be mutually exclusive, but many corporate legal executives are discovering innovative strategies that help them control costs in spite of increased day-to-day work by finding new efficiencies in their workflows.
Here are some tips for optimizing legal department spending practices amid rising corporate legal workloads, excerpted from “Spending and the In-House Legal Department,” an article published by the LexisNexis Practical Guidance team:
It can seem overwhelming to start from scratch on a quest to reduce and optimize spending. Budgets are large, to-do lists are long, and no one wants to cut their share of the resources. The best place to start is to come up with plans of action to address both internal and external costs. This is especially important in 2022, in the aftermath of a nearly two-year stretch when we’ve all been focused on just dealing with the urgent fires right in front of us. Take the time to look up and think ahead.
How do you know if your department’s targets for managing legal costs and leveraging headcount are reasonable? Benchmarking can be a powerful tool to understand if your legal department is performing well compared to peer companies, such as companies with similar revenue in the same industry.
Identifying, implementing and adopting the right technology solutions will pay back exponential cost savings while delivering increased efficiencies into your workflow. One survey by Alvarez & Marsal found that 44% of corporate legal teams increased their use of technology in 2021. But do the research to determine the upfront costs to implement the technology, as well as to estimate the ongoing costs required to stay current. It’s almost always a worthwhile investment, just make sure to consider the full picture in calculating the ROI. Also consider the risk of being under-resourced in your department and how legal technologies can help mitigate this risk, an additional component of the value when measuring the return on your technology investments.
Evaluate Outside Spend
Conduct an assessment of all outside vendors and how your engagements are structured. Can some legal work be shifted to lower cost providers or even alternative legal service providers? Also, scrutinize your existing compensation models and look for new approaches that might optimize your spend. For example, can you implement value-based billing arrangements in place of hourly fee arrangements?
Take a close look at whether a different staffing model — for example, sending certain types of work to paralegals, rather than lawyers — will enable cost savings. Start with the areas there it’s clear there is a need to reduce costs, relative to the value to the business, in order to build momentum and early wins.
Learn from Law Firms
It’s likely that the law firms you work with have had conversations with other corporate legal departments about this same challenge. Ask a few of your trusted outside counsel what strategies they’ve used to cut costs and gain efficiencies with their other clients. Is it possible to apply some of those successful ideas to your department?
Of all these ideas, there is no question which one is most preferred by corporate legal professionals.
The 2021 EY Law Survey, which was conducted with the Harvard Law School Center on the Legal Profession, found that general counsel are primarily focused on a greater use of technology as their key strategy to achieving cost savings opportunities, cited by 59% of GCs and by far the number-one response. The clear message is that the key to doing more with less is to leverage technology and information tools that significantly increase workflow efficiencies across the corporate legal department.
The challenge becomes which technology solutions are the most valuable and which information tools deliver the greatest value to corporate legal teams. A good place to start is to secure a one-stop legal research solution that places all of the resources, news and information that in-house counsel need to provide critical legal counsel to your business colleagues, right at your fingertips.
Lexis+® General Counsel Suite provides in-house counsel with a vast collection of legal resources, breaking business and legal news, and practical guidance content that includes practice notes, templates and checklists. Check out this YouTube video to learn more about how General Counsel Suite helps you manage the demands of today and anticipate the challenges of tomorrow.