5 Strategies for a More Cost-Effective Legal Department
Ever have a sneaking suspicion that other legal departments know something you dont about how to save on costs? Well, maybe they do. But you dont have to be out of the loop, according to a new analysis by CEB.
The member-based advisory company works with 1,150 legal departments around the globe, and recently surveyed 180 in-house departments (88 percent of them at companies based in North America) to examine the different practices amongst comparable departments with the highest expenses and lowest expenses.
The result is an analysis called 9 Efficiency Trends to Watch for in Legal. CorpCounsel.com caught up with CEB managing director Sampriti Ganguli to discuss some of the surveys top findings.
1. Perform more work in-house
Yes, its true: to save money, try doing more in the legal departmentas opposed to outside of the department. At most companies surveyed, legal departments devote about 60 percent of their spend to outside counsel. But, says Ganguli, the most cost-effective department can get that number down to 40 percent. So start thinking about a 60 (in-house)/40 (outside counsel) split.
2. Use non-lawyer professionals more often
CEB finds that 42 percent of survey respondents employ at least one non-lawyer professional for every two in-house lawyers. Those personnel can free up an in-house attorneys time and keep a law department from having to outsource certain tasks to (more expensive) outside counsel.
Non-lawyer professionals can tackle items that are more administrative in nature and/or require urgent turnaroundtasks like reviewing contracts and preparing filings. For a senior attorney to spend their time on that, its just expensive, says Ganguli.
3. Invest in legal operations capabilities
More and more, CEB is seeing people with titles like business manager and chief legal administrative officer showing up in law departments (especially large law departments). Whatever the title, they are responsible on a day-to-day basis for the management of that department, says Ganguli, adding: We often think of them as the key chief of staff of the GC.
Legal operations managers take on a range of responsibilities, such as implementing e-billing systems, analyzing outside counsel fees, and even tracking in-house attorneys CLE credits. As these managers carry out large technological or cost-reduction projects, it allows the general counsel to focus on giving pro-active legal advice to the company, says Ganguli.
4. Invest selectively in legal technologies
More than 90 percent of law departments use some type of legal technology, like document review or e-billing, according to CEBs data. But where in-house attorneys tend to become dissatisfied is in actually putting those technologies to work for them. They have a tough time in the implementation, according to Ganguli.
Her advice? First, law departments that invest in technology also need to be willing to invest in the kind of change management initiatives that will get the new tech to stick. Second, benchmark the product to make sure youre selecting the right vendor for your specific needs, Ganguli says. And, she adds, once youve purchased a product, keep working with the vendor to get your departments needs metdont simply chalk up the product as a lost cause.
Best-practice legal departments put in place a multi-year IT strategy, says Ganguli, and they work with their companys IT department to develop and implement it.
5. Unbundle legal services
Do you really need to pay a law firm for services like photocopying and research? These are areas where there are more cost-efficient alternative providers, says Ganguli.
CEB recommends that legal departments pick a practice area and then examine which activities within that area can be unbundled. Patents and litigation are two examples of narrow practice areas where theres a more mature market for providers, Ganguli says. A legal department can start there, for instance, and use it as a testing ground for how services could be unbundled in other areas.
And remember, Ganguli advises, to determine the business case for unbundling, such as noting when litigation costs begin to exceed 15 percent of a legal departments total budget. There has to be a business need, as opposed to just doing it for cost efficiency, she says.