Legal Department Financial Management Cloud Solution

Legal department financial management improves when legal operations professionals consider using enterprise legal cloud solutions. In this blog, we will explore some of the tools legal operations professionals can use when managing the law department’s budget. These tools help with legal billing from outside counsel and vendors, essentially helping maintain a balanced budget.

While budgets come in many shapes and sizes, the number-one goal is to maintain an equal balance between planned and actual expenses. Mid-to-large enterprises typically deploy legal department financial management tools using enterprise legal management software. It provides 360-degree visibility into operations, billing and invoicing, among many other elements. An enterprise should consider a comprehensive Enterprise Legal Management solution to obtain insightful financials that inform stakeholders.

What is Enterprise Legal Management Software

Let’s first take a look at what Enterprise Legal Management software is.

Enterprise Legal Management (ELM) refers to the comprehensive approach and system that organizations use to manage their legal operations, processes and resources effectively. Typically, ELM encompasses the following components:

1. Matter Management

Corporate legal departments can track and manage legal cases, including details about the case, participants, tasks, deadlines, and outcomes.

2. Financial Management

Every law department must manage its financials in collaboration with other departments in the enterprise. Improved financial management occurs with the tools and applications in the ELM platform. Financial management aspects of legal operations include budgeting, invoicing and expense tracking for the legal team, operations professionals, outside counsel, and other vendors. This often involves integration with accounting systems to streamline financial reporting and compliance.

3. E-Billing

Electronic billing systems that automate the submission, review and approval of invoices from law firms and other legal service providers. E-billing helps maintain compliance with billing guidelines and improves accuracy in financial management.

4. Document Management

ELM solutions create a centralized system that organizes and stores legal documents. All users can easily retrieve, collaborate and comply with regulatory requirements. A Word plug-in allows for drafting of contracts and other documents within the ELM system.

5. Contract Management

Contract lifecycle management is integrated into the ELM platform and allows the legal team and operations to oversee the lifecycle of contracts. Every stage of a contract is managed within the collaborative, single platform, from creation and negotiation through execution, compliance, and renewal. This includes tracking key dates, obligations and performance metrics.

6. Compliance and Risk Management

ELM includes features that ensure organizations adhere to legal and regulatory requirements. This includes managing risks associated with legal matters and implementing policies and procedures to mitigate those risks.

7. Reporting and Analytics

The best ELM software provides tools to create custom dashboards, scorecards and analytical reports using benchmark data. These tools provide the law department with proof points to showcase the status of performance, productivity, work, and matters. The reports can be shared with stakeholders in other departments, including the CFO, while also showing them to the General Counsel or Chief Legal Officer. The analytical reports support data-driven decisions, help identify trends, and improve overall efficiency.

8. Collaboration and Communication Tools

Enterprise legal management facilitates better communication and collaboration among in-house legal teams, external counsel and other stakeholders.

ELM systems integrate these components to provide a holistic view of the legal function within an organization, driving efficiency, transparency and better decision-making. These systems are designed to help legal departments operate more like a business unit and a better strategic partner, focusing on ways to add value, manage cost control, improve process optimization, and align strategically with the organization's goals.

Improve Legal Department Financial Management

In companies, legal operations teams manage, analyze, and report on accruals, budgets, cost-spend analyses, and invoicing. A source for most of the billing comes from vendors, many of them law firms. At various times throughout the year, financial teams see an influx of invoices. This may be quarterly, or when businesses engage in year-end accounting. Regardless of the timing, ensuring billing accuracy is of primary importance. If done manually without software, valuable time is expended, leading to zero cost-savings benefit to the legal department.

Legal operations professionals should identify an enterprise legal management software solution that includes AI-powered financial tools. Some of these tools actually automate invoice review and can flag errors and then correct them. This type of proprietary AI technology automates the review of invoices line by line so that the descriptions comply with billing guidelines.

Complex algorithms facilitate invoice review so that categorization, comparisons, adjustments, and analytical reporting synchronize with the legal department’s billing protocols. When smart financial tools are used, invoice reviewers’ time is saved, and this also saves overhead costs with more time efficiency.

Here are some value-added benefits to legal operations teams that utilize ELM software with smart financial management tools:

• Accuracy of invoice review improves whether digital or paper documents

• Invoice processing accelerates, and this also saves time in the process while saving on overall costs

• If inappropriate charges are recorded on an invoice, the smart system automatically spots these errors, and they can be rectified

• Manual coding of invoice descriptions by outside counsel is eliminated, and this makes vendor management of the bill review process more streamlined and accurate

Many errors, like double billing, billing legal fees for administrative or clerical tasks, and partners with high billing rates adding time to an invoice, can be flagged with a smart financial management tool.

Legal department financial management requires a robust and advanced enterprise solution which helps minimize legal spend with cost-cutting strategies. 

Learn more about a solution for your legal department.