3 Tips for more Effectively Managing Legal Spending

by | Jul 17, 2014

3 Tips for more Effectively Managing Legal Spending

The general counsel needed a report. The corporate legal department had spent more than $20 million on external legal fees in the previous year, and he needed to know how much of that was spent specifically on litigation, where it was spent, and why.

He tasked Mary Stich with generating a report which would allow him to identify areas to cut legal costs.

He needed the report in a couple days which at face value seems reasonable, but Ms. Stich faced one sizable obstacle – the legal department’s operations were mostly paper-based.  Matters were not in a system that could be tracked, let alone invoicing and costs as compared to the budget planned.

Ms. Stich walked down to the accounting department and asked for help. Her accounting colleague replied to the effect, if she could provide the name of the law firm, they could pull all the invoices the business had paid to the firm.  It wasn’t enough – the GC needed a higher level report looking at litigation spending across the business.

That may well have been Ms. Stich’s burning platform for Enterprise Legal Management (ELM) a system for linking all aspects of a legal matter – from documents and case files to budgets and invoicing – together.   Since then, she’s been involved with two ELM implementations, at two separate companies, while serving as inside counsel.

This was a story she relayed on a webinar presented by Today’s General Counsel titled Great Expectations: Rackspace Corporate Counsel Finds the Must-Have Attributes of an ELM Solution.  The event was sponsored by the LexisNexis® CounselLink® team and a recording is available for review.

Both sides of the table

Ms. Stich earned her stripes in big law before moving in-house.  Today she oversees litigation and employment law as a vice president and associate general counsel for a “whacky fast-paced cloud computing” in Rackspace Hosting.

She describes her prior life in big law as two-fold – to solve legal problems for clients and to tally up billable hours which is how performance is measured. As inside counsel she sees her role as having a mandate from the flip side:  Reducing legal spend.

Helpful tool: Click here to register to download a copy of
 Gartner Magic Quadrant assessment of ELM software.

3 Tips for more Effectively Managing Legal Spending

Ms. Stich has done away with “funny money numbers” in legal spending.  By this she means the law firm that proposes a $50k monthly budget without providing context for how it arrived at that number.  In addition, when the invoice comes in for $60k she’s stuck with a bill that’s 20% higher and without any advanced indication as to why the bill was higher.

The ELM system has provided her with an ability to benchmark legal metrics against both internal and external sources to have context  around budgets – all while providing tools for collaborating on matters, deadlines and understanding the status of the cases.  During the webinar she offered a plethora of tips for gaining better visibility and control over legal work; we picked out three and paraphrased them below:

1. Partner with the finance team.  By her own admission, she was at one time “personally resistant” to this idea because the finance department isn’t likely to inherently understand the nuances of legal spend.  However, partnering has two benefits for corporate counsel in a) providing a financial skill set that isn’t usually taught in law school and b) building credibility for fiscal responsibility. The features provided by an ELM system provide the corporate legal departments with the ability to report with precision how a legal budget is performing against matters in progress.

2. Demand transparency in budgets.  For all the discussion of partnering with outside counsel, Ms. Stich recommends partnering with external law firms on metrics and transparent budgets. She rewards firms with that “get on board” with this idea by sending them more cases and has terminated relationships with firms that do not.  ELM provides her with the ability to run legal spending reports by matter type and by firm (among many others), for example, which she uses to identify her top firms.  With this information, she’ll negotiate flat fees or discounted rates, and shift more work to the firms that agree.

3. Leverage benchmarking data. TheCounselLink platform provides legal spend benchmarking data she can use to negotiate rates with external law firms. For example, she can identify the average partner rate for a large law firm in New York and use the data to negotiate with a partner from a firm she’s identified for a specific case.  Once an agreement is reached, the ELM system allows her to track spending and matter progress easily through to resolution.

* * *

The complete webinar runs about an hour and a recording is available online for review at any time.  Her presentation, moderated by our own Ed Chang, is full of additional ideas – and visuals – to explain what her corporate legal department has been able to do with ELM.

Unlike the anecdote in the beginning of this post, she’ll have answers to the GC’s questions at her fingertips.

If you enjoyed this post, you might also like:
How ELM Drives Predictable Corporate Legal Spending

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Contributing Author

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