In today’s economic climate, companies are increasingly focused on optimizing both internal and external resources; Legal is no exception. From simple spend visibility to cost control and efficiency, modern legal spend management solutions are helping forward-thinking General Counsels make more strategic, data-driven decisions about how they invest their outside counsel spend.
But what benefits can you expect from your legal spend management system? Let’s break them down here:
1. Better Strategic Decisions Driven By Data
When it comes to managing your outside counsel spend, everything (and we mean everything) starts with your data.
Legal billing — from getting rate visibility to discount clarity — is complicated. For example, your rate card and the effective rates you actually pay may be very different. Understanding that (and many other aspects of your bills) is critical to effective budgeting, forecasting, and strong outside counsel vendor management.
Knowing your numbers like the back of your hand won’t only help with budgeting or operational efficiency. Data will also help you make better, faster decisions. For example, which firm in a panel is most efficient for certain matter types? Are you overpaying because of inappropriate staffing decisions (e.g., partners executing associate level tasks or consistent meeting overstaffing)?
Fast access to trustworthy data that can be sliced and diced to support your business’ specific needs and your specific questions will not only save you and your team time and money, but it will also give you the fuel you need to quickly make truly informed decisions.
2. Clear “Should Cost” Understanding
What should that big matter you have coming up actually cost? It’s a question GCs and finance departments ask themselves all the time, with little success. RFPs are often wildly off when it comes to predicting costs. It’s common for a matter to cost 150-200% of the firm’s original bid. So, what’s the best way to anticipate what a big upcoming matter will cost?
True, market-driven benchmarking is the only way to not only anticipate more accurate costs for upcoming matters, but also to obtain the most competitive rates or AFAs.
However, benchmarking can be tricky. Make sure your benchmarking solution considers practice area, matter type, and tier of firm. For example, you can’t compare complex real estate litigation with standard insurance claims litigation. You also can’t compare insurance claims litigation costs for one cause of loss with another, or from one jurisdiction to another. So, make sure your benchmarks allow you to get granular; anything less can leave you holding the bag on a very big and unexpected bill!
3. Better Governance
Managing your outside counsel firms can be challenging. Just enforcing guidelines accountability is not only time consuming but can also be like finding a needle in an intentionally large haystack. Even getting visibility on their staffing practices can be tough.
Modern legal spend management software can remove the headaches of guidelines compliance and provide much-needed visibility on staffing and billing practices for both you and your firms. Some solutions provide easy-to-use firm report cards that show trends over time on everything — average hours per matter, timekeeper breakdowns, rates, and more. When shared with your firms, report cards provide a fantastic basis for effective management; many forward-thinking GCs use them to drive quarterly or biannual reviews.
4. Clean, Structured, Usable Data
Data can provide a window into performance, highlighting meaningful opportunities for improvement. Most successful businesses have leveraged data for years to inform strategic decisions as well as operational efficiency – but not so much in legal departments.
Legal billing data is a necessity to understand all aspects of success. However, historically, legal billing data has been a mess (to put it mildly). With no standard taxonomy (way of organizing data), copious human error, and unique domain challenges led to a web of tangled data that in most cases just didn’t line up. With no apples-to-apples comparison possible, data often led to misleading takeaways and potentially poor decisions.
But, never fear. Advanced legal billing software can help you make sense of your data. By leveraging new technologies like machine learning and AI, cutting edge legal billing solutions can not only structure the data you have but also correct errors and enhance the data to allow for deeper insights.
Get in touch with our team of legal billing and data experts to find out how Onit can transform your legal department.