With the world in constant flux and macroeconomic trends influencing companies to increase scrutiny on operational and cost efficiency, a dual challenge has been created for Legal. Here’s why both speed and spend matter – and what you can do to execute gains in efficiency, revenue generation, and transformation across the enterprise
As President Harry S. Truman once famously said, “The buck stops here.”
The nature of accountability has long been considered an essential component of leadership. Taking ownership of the choices we make emboldens transparency and empowers collaboration — which, in turn, elevates trust and enhances productivity. Accountability is also a proven baseline for measuring legal operations’ impact on its business.
In the third and final chapter of the Enterprise Legal Reputation (ELR) Report, the multinational study* spotlights the unlimited potential of legal operations to be a transformative agent in driving meaningful business results with technology.
But while internal clients are most concerned with Legal’s operational efficiency, such as responsiveness, speed of execution and resolution, the ELR Report revealed that executive leadership and C-suite members concentrate most on cost efficiency. And with a 2022 priority initiative on the reevaluation of outside counsel providers and spend, nearly two in five (37%) legal respondents say chief financial officers (CFOs) hold Legal accountable for outside counsel spend, as well as legal expenses in general. While this is hardly surprising, what is eye-opening is that accountability is not necessarily tied to the CFO, CEO, or even internal management teams: One in 10 (11%) say it is their board that also holds Legal accountable for spend.
The price of accountability
In many companies, general counsel (GC) and even chief legal officers (CLOs) do not have a seat at the boardroom table. So to execute gains in efficiency, cost-justify, and demonstrate the value of its operations and impact on business, Legal must share accountability and collaborate more strategically.
Three in four (75%) U.S. and nearly seven in 10 (68%) German respondents feel their departments are cost-efficient, whereas just half (52%) in France and less than half (44%) in the United Kingdom do. With many enterprises holding operations in more than one nation, this variability can be startling, leading to questions about operational management and cost structures.
The bottom line is that the legal departments that not only track legal spend but drive the best possible commercial bargain with outside counsel are the ones who show the greatest market intelligence and who will accelerate their own bottom-line efficiency, as well as topline revenue recognition.
3 Keys to Improving Legal Ops’ Speed and Spend
1. Acknowledge the periodic hidden factory.
Sometimes Legal can be perceived as a hidden factory – a concept coined by statistician Armand Vallin Feigenbaum referring to the potential of a department, activity, or process to create roadblocks and work against efficiency.
It has never been Legal’s intention to put the brakes on business. However, for Legal, the devil is in the details; that is literally Legal’s job as protector of the business to deliberate over contracts and deals with a fine-toothed comb of compliance and risk mitigation. Add to this that the average legal ops professional is required to support 23 other employees, according to the Corporate Legal Operations Consortium (CLOC). But contract lifecycle management (CLM) solutions that offer self-service portals to automate contract review can not only shrink sales cycles by 24%, but also give Legal back 30% of their time.
2. Evolve your legal spend management strategy.
In an ever-changing macroeconomic market, “unexpected” budget changes can become the norm — so being proactive when it comes to managing spend, rather than reactive, is crucial. Modern legal operations can catapult efficiency on every level, however, by creating systems to track spend and identify opportunities to sustainably control outside legal counsel.
Utilizing a cloud-based platform and centralized database with spend management solutions will permit legal ops professionals and GCs to gain oversight of matters and spend as well as optimize costs, manage vendor performance, and save up to 26% on accrual or unbilled estimates for work in progress.
3. Invest in a silver bullet.
Today’s climate of instant gratification can lead to clients, both internal and external, expecting (even demanding) both accountability and speed. While it could be advantageous to introduce an intuitive timekeeping solution to monitor how much time is spent on various legal tasks, operational efficiency doesn’t always require the same level of formal tracking that cost efficiency does.
When it comes to matters of spend, though, it is imperative. Yet less than half (48%) of legal respondents worldwide currently utilize AI-integrated e-billing solutions — even though implementing software to expedite invoicing and replace paper billing is proven to not only improve revenue flow, but to also mitigate unauthorized charges and surprise fees, contributing to 8.4% annually in legal spend savings.
Putting the business first
Legal need not be a cog that slows the wheel of the enterprise. In fact, with a dual focus on speed and spend, Legal can drive efficiencies, control costs, and demonstrate it understands specific business needs to achieve success, now and moving future-forward.
By improving operational and cost efficiency, Legal will also contribute to faster revenue generation, competitive differentiation, margin control, and corporate change — delivering value and operational wins that materially impact its businesses in innovative, game-changing ways.
Read the ELR Report to learn more about how legal professionals view their relationships with internal clients in comparison to the image enterprise employees have of their legal departments and how Legal can evolve to prove material impact and improve efficiencies across the business.
*The ELR Report is a third-party, multinational study of 4,000 enterprise employees and 500 corporate legal professionals across the United States, United Kingdom, France, and Germany intended to showcase relationship dynamics and perceived image between corporate legal teams and enterprise organizations.