When procuring new technology, one of the first things prospective buyers want to know is — “What kind of ROI can I expect?”
Bodhala’s market intelligence has helped corporate legal departments around the world save hundreds of millions of dollars on their outside counsel spend by identifying inefficiencies and opportunities to save. But one of our key learnings along the way has been that for many GCs and legal ops leaders, ROI isn’t just about dollars and cents. Sometimes streamlining operations to save time or resources is the number one goal or reallocating spend for an important (and expensive) matter. Ultimately, it’s about each department’s goals, which can run the gamut from financial to operational — and everything in between.
Here are the top four benefits of a quality legal spend management system (beyond just banking the savings):
1. Operational Efficiency
Ever find yourself wishing there were more than 24 hours in the day? Manual reporting and analysis – digging through spreadsheets – can be extremely time–consuming when it comes to legal data. From aligning data to consolidating various file formats, it wastes incredibly precious time and resources.
Sophisticated legal spend management systems allow in-house teams to run reports and analyses with ease. The best ones (ahem, Bodhala) also clean and structure the data as it enters the system, ensuring you get the most accurate data and best analytics possible.
The right software can streamline your department’s internal reporting – everything from QBRs to panel analysis – saving your team hundreds of hours (or more).
Crunching numbers doesn’t have to take all day — you just need the right tools.
2. Investing in Key Players
Without data, in-house teams have long struggled to effectively allocate work and make the appropriate staffing decisions, like whether to hire internally or use outside counsel.
But data is changing this narrative.
A smart, sophisticated legal spend management solution will illuminate the granularities of your outside counsel spend, enabling you to dig into the key metrics that influence budget allocation.
Armed with these insights, you can analyze key metrics, such as average practice area spend or average partner rate, to identify areas where you’re spending a significant amount of your budget. As a result, you can determine if it’s a more financially sound decision in the long run to make an internal hire in the relevant domain rather than continue outsourcing work.
Digging into other key metrics, like top lead partner or average partner hours per matter, can highlight your top performers. Knowledge of who’s billing hours on the most pivotal portions of your matters will enable you to identify partners who are highly specialized and critical to your success – and who should be compensated accordingly. Yes, that’s right — you should actually pay your “Lebrons” more. But you will want to know where to get those extra dollars – and the data can tell you that.
3. Investing in New Technology
It’s no secret that the legal industry has long shied away from technology. And even when there is a need or desire to onboard a new tool, there’s no technology budget — it’s a lament in-house teams share far too often.
That’s why actively and effectively managing your outside counsel spend is critical. In-house teams are throwing precious dollars out the window each year by assuming they have zero leverage in pricing negotiations with law firms. But that couldn’t be further from the truth when you have data on your side!
Data gleaned from a sophisticated legal spend management solution will highlight areas where your spend can be reined in. For example, are you paying above-market rates for the partners or associates handling your matters? Did an esteemed partner log hours on a task that really should have been handled by a first-year associate? Did you unnecessarily blow budget dollars on a matter that should have cost you far less?
Armed with these insights, you can make strategic and data-driven decisions that will not only yield savings but also enable you to invest in the technology you need.
Of course, you’ll want to understand the ROI you can expect from the next solution you onboard, but in the case of a legal spend management software investment, it will be a catalyst for savings and long-term benefits.
4. Rainy Day Fund
Although savings isn’t always about money, having some extra cash set aside never hurts. You never know when the economy might take a turn for the worse, or when you’ll get hit with an unexpected expensive lawsuit.
It’s a smart, strategic move to set aside some of the ROI realized from your legal spend management technology towards a “rainy day fund”. Having some cash set aside can provide you with peace of mind when the unexpected gets thrown your way.
Going Beyond the Dollars
Data should play a critical role in your budgeting and forecasting processes. Although data cannot account for everything, the ROI realized from data-driven spend management should provide you with a safety blanket of savings.
A good legal spend management solution will save you money. But a great legal spend management solution will allow you to identify opportunities to streamline processes, improve law firm relationships, invest in new tools, and save you money.
With data and a smart, sophisticated legal spend management solution on your side, you can run your legal department like a business and meet your management goals — whatever they may be.