According to the 2019 Future Ready Lawyer Survey from Wolters Kluwer Legal & Regulatory, 50% of in-house lawyers identified reducing/controlling outside legal costs among their biggest challenges.
Here are 7 tips to help your legal department overcome the challenge of reducing/controlling legal costs:
1. Centralise information related to legal costsTracking legal activities, budgets, invoices and costs manually with email or spreadsheets is inherently inefficient. When your information is decentralised, it is difficult to see the links between costs and specific contracts, claims, assignment letters or other matters. And that makes understanding (and controlling) costs close to impossible. In short, when you can see the costs that are distributed across various areas, you can finally start to manage them.
Centralise information related to legal costs and view them with respect to assignment letters etc.
2. Track actual costs against budgeted costsWhen you manage legal invoices and budgets on a single dashboard, you can make better comparisons between your actual costs and the budgeted costs and stay on top of your legal spend. By getting direct insight into how costs and budgets relate to each other, you can take action when and where needed.
3. Track costs changes over time and matter life cyclesTracking your current year costs against previous years, or the changes in costs and accruals, over matter life cycles help you improve the accuracy of forecasts. Whether in regards to cases, contracts, or IP, any matter can accrue external costs. Monitoring changes in costs over time allows you to obtain a better picture of your performance over time and make improvements where needed.
Have a better overview of matters
4. Quick and easy reportingBecause all your legal invoices and budget information lives in a single solution, it becomes very easy to quickly generate insightful reports. Whether your CFO is asking for a mid-period spend update or you are preparing for a meeting with your most used Law Firm, you will always have the right information at your fingertips to be competitive and accurate.
Report on the law firms you work with, based on the invoice information
5. Set billing guidelines and enforce negotiated ratesInefficient processes and lack of enforced negotiated rates are among the major contributing factors to excessive legal costs. By setting out billing guidelines and enforcing negotiated rates, you have a structured overview and your payment amounts remain consistent. This way, if there are deviations (lines that are non-compliant with the set guidelines or rates that are different to what you agreed to) you can easily identify and correct them. By setting billing guidelines and enforcing negotiated rates, you can reduce invoice errors, avoid paying charges that are different to the initial agreement and have cost savings (i.e. volume discounts and alternative fee arrangements). By streamlining invoice processes, you reduce the time spent processing and approving invoices and you can even take the advantage of early pay discounts.
6. Optimise firm selectionWhen you manage your costs in a structured manner, you have a better overview of the costs and the law firms you work with. Through visibility and reporting, you can make assessment and optimise firm selection. This way, you look at the value delivered rather than just the cost incurred.
By managing invoices on a legal dashboard, you have a better overview of costs and the law firms you work with
7. Conduct auditsWhen all information related to legal costs are centralised and updated in real-time, you can conduct audits to approve, review, adjust or reject costs at any time. Therefore, the legal department will work with the most recent information with an archive on the side. Because the actual invoice documents are stored in the same place as well, you can easily check for accuracy when needed. This also makes reporting much quicker and accurate, thereby making it easier to conduct audits and improve cost issues as you grow.
In conclusion, by following these tips for managing legal costs you can transform legal department into a true value-centre, with better control over and ability to reduce legal costs.
Do you still rely on manually updated spreadsheets for your legal costs? Learn more about how you can manage your invoices and legal costs more efficiently and elevate legal department performance. Read here.