An efficient in-house legal department is a cost-effective one. That’s the finding of a recent analysis by CEB, a member-based advisory company that took a look at the budgets of 180 legal departments to understand “trends across industry, revenue band, and complexity.” They discovered nine efficiency trends that may help you streamline your own department.
1. Perform more legal work in-house. As CEB states, “it’s just simply more cost-effective to have in-house staff do the work that we often ask outside counsel to manage.”
2. Use non-lawyer professionals more often. An efficient, streamlined workload means you’re able to delegate routine tasks to paralegals or non-lawyer professionals. The CEB report therefore urges you to have enough support staff for your lawyers.
3. Invest in legal operations capabilities. Do you have a legal operations manager? You may need one. They manage “budgeting, technology selection, vendor management, and career development—all vital activities to manage costs and drive to greater outcomes,” the CEB report states.
4. Invest selectively in legal technologies. Technology is a beautiful thing, but only if your department can use it to its full capabilities. The CEB advises that you “push forward with technology initiatives, but demand more from providers and don’t underestimate the workflow and change management requirements.”
5. Unbundle legal services. Administrative and information-intensive activities can often be outsourced to non-law firms, leaving your department better able to handle the rest of the workload.
6. Focus on litigation matter budgeting and oversight. If you don’t budget for it, you can’t truly manage it. “There is huge variation in even basic litigation management techniques,” the CEB found. “The average company does not budget for roughly a third of its matters; and while a quarter of legal departments budget for all or almost all matters, just as many almost never create budgets.”
7. Use smaller law firms more often. In general, smaller firms charge lower rates while providing the same expertise, experience and coverage of their larger brethren. The CEB found that many companies are “reducing their reliance on large law firms in favor of midsized law firms … that permit them to consolidate their legal spending.”
8. Reduce the number of law firms. CEB members that consolidate legal work to a smaller number of firms have lower outside counsel costs. The CEB analysis states that “companies that concentrate 98% of their costs in their top-10 suppliers are most effective in reducing costs.”
9. Be judicious with alternative fee arrangements. “Although our research suggests that alternative fee arrangements are useful in reducing costs,” the CEB writes, “the way in which legal departments administer and monitor fee arrangements is far more important than simply having them.”
Read the CEB’s full analysis here.