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Note: This post was originally written by Mike Haysley.
As previously discussed in this blog, LexisNexis CounselLink recently published its first Enterprise Legal Management Trends Report. This report contains a wealth of information on evolving practices by corporate legal departments regarding legal spend management. An important question for individuals in roles responsible for managing legal spend – be it General Counsel, legal department operations managers, or in-house counsel – is how this information should be used, and perhaps more importantly, translated into measurable, actionable tasks.
The report identifies real-world areas where opportunities exist. This can be an “Aha! moment” where a new concept is recognized, such as measuring volatility and staffing mix in individual practice areas, or reinforcing a hunch that you already had, but were not able to prove due to lack of data. For example, in my prior role as Director of Legal Operations for a large legal department, I had a strong suspicion that there were opportunities to shift the mix of law firm to lower cost providers. This suggestion was often met with subjective arguments about the risk involved in the matter and the total legal cost (including settlements, judgments, and business impact). The report shows, however, that many legal departments are finding great success in evaluating the risk and shifting work.
This raises a third benefit of the report – providing specific examples of what other legal department arereally doing. Armed with concrete information about real opportunities, discussions with legal department leadership and senior management transform from theoretical discussions to data driven decision making. Instead of saying, “This might work,” you are able to say, “Other legal departments are finding success doing this specific thing and we can also benefit from it.” These types of discussions lead to buy-in that drive action.
Moving from idea to action is often the stumbling block. The first step in evaluating opportunities is to benchmark your own performance against other companies. CounselLink Insight provides this ability and shows areas to focus your attention. Although findings will vary by client, below are some factors and specific actions to consider:
- Compare rates and staffing mix for individual matter types where data suggests there may be pricing issues.
- In instances where rates are high, evaluate the risk of those matters and consider whether lower cost alternatives would be appropriate.
- In matter types where there is commonality in facts, required knowledge, process and parties, consider consolidating work into a preferred panel of firms. In addition to lowering cost by leveraging spending power, this allows for greater knowledge gain and work product re-use by firms, which in turn translates to efficiency gains.
- Approach preferred firms to discuss alternative fee arrangements. With better data on both sides of the table and an increased risk tolerance by firms, there is greater likelihood to reach a fair price.
A critical requirement for to success of these efforts is to ensure they all translate into on-going practices that are achievable and well defined. This should not be a one-time event. For example, guidelines should be developed to assist internal decision makers on the process, available tools, and best practices in selecting outside counsel. And, of course, reports should be created to measure performance and allow for tweaks to the processes.
The report will be published every six months. This schedule will also serve as a good reminder to re-assess your performance and review the trends for new opportunities.
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