Legal Spend Management : Controlling Legal Expenditure

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What is legal spend management?

Legal spend management is the practice of controlling and reducing legal expenses, particularly those legal services that are outsourced.

This may involve using specialised software to gain visibility into legal spend, automate the collection of spend data, accurately report and forecast law department budgets, and create a collaborative, value-driven relationship with law firms.

The goals and main benefits of legal spend management are increased efficiency, and the ability to track and identify opportunities to reduce costs, and ultimately create spend management strategies to achieve sustainable savings.

Making use of this enables legal departments to report on legal spend, use spend data to drive negotiations and selection, and gain additional visibility and control over legal expenses.

It also provides the necessary tools to analyse legal spend data, identify areas of high legal spend, and negotiate legal fees with external legal teams and outsourced departments, resulting in cost savings and reduced legal expenses.

legal spend management

What are the common challenges in implementing legal spend management?

The common challenges in implementing legal spend management include:

  • Visibility and data collection: Businesses may encounter difficulty in gaining visibility into legal spend and manually collecting and reconciling spend data. This can prove to be time-consuming and error-prone.
  • Technology implementation: Challenges are common in implementing legal spend management platforms. This includes the need for in-house IT support and the complexity of traditional interfaces. However, cloud technology has made legal spend management software more accessible.
  • Change management: Resistance to change from internal and external stakeholders is common. This includes legal teams and law firms, as well as the need to create a collaborative, value-driven relationship with firms.
  • Analyzing and acting on data: The ability to analyze legal spend data, identify areas of high legal spend, and negotiate legal fees with outside counsel to achieve reduced legal expenses can be difficult.
  • Budgeting and forecasting: Businesses may face difficulties in accurately reporting and forecasting law department budgets and creating spend management strategies to achieve sustainable savings.
  • Integration with existing systems: It can be a challenge to ensure seamless integration with existing software and systems, such as accounts payable solutions, to gain additional visibility and control over legal expenses.
  • Legal fee negotiations: The challenge of bringing objectivity to legal fee negotiations and enabling lawyers to refocus on value rather than just costs.

Through addressing these challenges, law firms can effectively implement legal spend management to control and reduce legal expenses, ultimately leading to increased efficiency and sustainable cost savings.

Key metrics

Some key metrics to track in legal spend management include:

  • Total legal spend: Tracking the total amount spent on legal services, including both in-house and external legal costs.
  • Spend by law firm, practice groups, and matter type: Analysing spend data by law firm, practice groups, and matter type to understand where the legal budget is allocated and identify areas for potential cost savings.
  • Forecasted spend vs. actual spend: Comparing forecasted legal spend with actual spend to ensure budget adherence and identify variances for future planning.
  • External legal spend by matter type, department, team, or region: Measuring legal spend on outsourced matter types to understand cost-effectiveness and make informed decisions about insourcing or outsourcing legal work.
  • Platform usage: Tracking the usage of legal spend management platforms to understand how business colleagues are engaging with the technology and to showcase the value provided by the legal team.

Monitoring these metrics can help legal departments to gain valuable insights into their legal spending. this can further assist them in identifying opportunities for cost control, and demonstrate the value they provide to the organisation.

How can an Ivinter consultant assist with legal spend management?

A management consultant from the Ivinter team can help with legal spend management in a number of ways. We can primarily assist by providing expertise in controlling and reducing legal expenses.

We have many years of experience working for legal departments and law firms to identify cost-saving opportunities, offering technology and consulting services, and provide specialised legal spend management solutions.

Our consultants assist in understanding, allocating, and controlling the spend of outsourced legal work. We often do this by negotiating new legal contracts or agreeing retainers with Counsel etc, enabling legal teams to be more strategic in their allocation of claims to high-value matters.

We also help with the implementation of legal spend management platforms, offering advanced analytic functions to analyse legal spend data, identify areas of high legal spend, and negotiate legal fees with external parties ultimately resulting in reduced legal expenses.

We make use of industry benchmarks and data-driven insights, to help legal departments identify immediate cost savings opportunities and create a clear line of sight into their legal spending.

We also provide strategies to make legal departments best in class, using legal spend management to know where to save and drive action based on the insights gained from spend analysis. 

Ivinter provide practical advice and assistance that helps to propel your legal business forward. We believe that every law firm has the potential to be great, and our role is to help your organisation grow through strategic advice and hands-on, practical support in legal operations, strategy and marketing.

In addition to this, Ivinter Business Management provide specialist advice to law firms on legal costs changes, costs drafting and costs litigation. We provide a service tailored to your law firm and assist in all specialist areas including personal injury and clinical negligence costs.

Contact us today for specialist advice from a legal management consultant today.

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