Getting the third degree from the CFO on law department spending sounds about as much fun as a root canal. And even when general counsel are trying to implement software systems to track, analyze, and reduce spending, they still may be met with an arched eyebrow from the executive who holds the company’s purse strings.

Those systems (known as ”software as a service,“ or SaaS) cost money, too, after all. And while some CFOs are fully behind the idea of a system that would enhance the company’s internal financial controls (cue Sarbanes-Oxley compliance here), others are initially more skeptical. “The CFO is saying, ‘Can you justify this to me?’ ” says Rob Thomas, co-founder of the Serengeti Law spend-tracking system and vice president for strategic development at Thomson Reuters.

Thomas presumably has had a fair measure of success in helping GCs make the case for spend-tracking software, which he outlines in a new white paper being released on Monday. Serengeti, which launched in 2001, now has 150,000 users in more than 180 countries, and adds more than 3,000 new users a month. Close to 500 in-house departments are on board—including, Heinz, Alcatel-Lucent, and Capital One. The cost of the system ranges from about a quarter of a percent of a company’s outside legal spend, to about one percent of that budget. 

In-house counsel face something of a learning curve in communicating with the CFO. That tension arises, in part, from the particular differences in their professional and managerial backgrounds. “Most of us lawyers are not trained to be managers,” says Thomas, himself an attorney and the forming managing partner of a law firm.

Thomas’s paper tackles that disjuncture on two main fronts: outlining how SaaS solutions both improve financial controls and improve law department efficiency and performance.

To the first point, Thomas says GCs and CFOs have to be able to address “anything that might have a material impact on financial exposure of the company”—including exposure that comes from legal.

He stresses that SaaS solutions aid in the efficient collection of financial data by maintaining “all of the company’s legal work in a single online site, connected to everyone who is involved in such projects, both inside and outside the company,” according to the paper.

In contrast, he says, many GCs rely on a “cobbled-together system” comprised of files, emails, spreadsheets, and reports—a product of “on-the-job training,” Thomas says. “You’re doing your best to create something from scratch.”

Another plus for CFOs is that these management systems can maintain audit trails and keep financial information current.

For example, most in-house counsel think of electronic billing as a PDF attached to an email. But Thomas is talking about using software to capture and analyze all of the information contained in a legal bill on a continual basis—who did the work, what was done, how long it took, and how much it cost.

Software can run analyses of those bills so that in-house counsel can better measure the efficiency and the effectiveness of firms—for example, looking at how much partner time versus associate time versus paralegal time was spent on a particular matter, and comparing those staffing choices across firms.

Which brings us to Thomas’s second big point: demonstrating that spending management systems will also improve financial performance. He argues that it not only aids in quickly spotting costly areas, but also can play a role in setting a budget—and sticking to it—that keeps costs down:

Having the system automatically compare bills, individually and collectively, against the budget during the course of the project saves even more by highlighting any spending issues so they can be addressed immediately, rather than at the end of the project when it is too late for meaningful changes.

Newly available financial analyses of what certain types of legal projects cost, how long they take, and the results obtained can also facilitate the use of alternative fees that incent beating the average, rather than getting paid to spend more hours . . .

That’s the kind of conversation that helps get GCs and CFOs on the same side of the ledger.