What is Legal Spend Management?

Legal spend management is the practice of controlling outside counsel spend. Management of outside counsel spend involves having visibility of spend, identifying and actioning cost-reduction opportunities, and budgeting future spend.


A typical legal team will receive thousands of invoices a year. Reviewing these invoices manually is time-consuming and prone to error. The first stage in legal spend management is to automate the review of legal invoices, a process known as e-billing. Legal e-billing differs from a generic accounts payable (AP) system in a few ways and is essential for legal spend management:

    • Different billing guidelines – what firms can and cannot invoice for – exist for different firms. Trying to remember and accurately apply these rules when manually reviewing invoices is a daunting task, and mistakes will slip through the net, resulting in overpayment. Legal e-billing functionalities allow the corporate legal team to set up rules; incoming invoices are automatically reviewed, approved, rejected, or flagged for further review.
    • A legal invoice can contain hundreds of line items for different work and task codes. A standard AP system cannot track these effectively. E-billing allows law firms to submit LEDES format invoices, which enables the management and reporting of these task codes and allows the legal team to analyze the costs of different work types, compare value across firms, and budget headcount and spend required for future work.
    • Some legal e-billing solutions allow law firms to submit their work in progress with the corporate legal team reviewing or rejecting the work the firm wants to bill. This means invoices are theoretically approved before they are formally submitted, which removes unexpected invoice amounts, reduces the number of rejected invoices, and speeds up payment to the firm.
    • Legal spend management software integrates with accounts payable solutions (if desired) so the organization’s accounting processes can still be followed; the legal team gains additional visibility and control to manage legal spending effectively.


While legal e-billing reduces costs quickly by enforcing billing guidelines and increasing team productivity, full legal spend management goes further than this. As law firms become better at submitting compliant invoices, the savings from guideline compliance start to stabilize. This tends to happen 1-2 years after implementation. At this point, legal operations will use the accumulated matter spend data to make more strategic spend management decisions.

However, this can be done earlier on in the spend management journey. Legal spend management software enables legal operations to report on legal spend and use spend data to make sourcing decisions, drive negotiations and selection, and create a collaborative, value-driven relationship with firms. Features of legal spend management software, besides e-billing, include spend dashboards and reports, RFP tools, and legal analytics capabilities. Most legal spend management solutions also contain legal matter management features, which would not exist in an AP system. The matter data gives a fuller picture of legal work and its associated cost.


Return on investment (ROI) is very easy to prove with legal spend management, as most benefits are directly related to lowering costs. These benefits include:

    • Significantly reduce legal spend. A fairly typical legal department can save 4 EUR per invoice, 5% of the external legal spend costs in the first year, and 8% of the external legal spend costs after the second year (all data is subject to average empirical values). Download our business case guide to calculate your potential savings.
    • Speed up invoice processing time and take advantage of early pay discounts from firms.
    • Visibility of work in progress and accumulating costs without waiting for the invoice.
    • Track and report on matter budgets, improving the accuracy of forecasts over time.
    • Improve visibility into matters and their associated costs through real-time dashboards and automated reports to stakeholders.
    • Automate manual processes to improve team productivity and free counsel to concentrate on high-value work.
    • Accurate, consistent, comparable, and reliable data across all matters.
    • Improved collaboration internally and with outside counsel that drives better matter outcomes and higher quality firm relationships.
    • Make data-driven strategic legal operations and management decisions, including sourcing, panel reviews, and negotiations.
    • Like-for-like comparison and review of law firm rates and value for money.
    • Fairer, competitive, and comparable proposals from firms

Request a demo of BusyLamp eBilling.Space today.

Thank you for subscribing!