4 factors that affect your legal spend (and how to unlock potential savings)

Lauren Lee | July 29, 2020 | Articles

What if we told you that you could shave $924,900 from your legal spend each year?

According to a combination of industry data and our internal research, the right spend management platform can help you achieve that level of savings.

We’ve identified four key factors that have a significant impact on legal department budgets. We’ll walk you through how a spend management platform can help you automate more tasks, gain better visibility into your overall spend, and unlock potential savings.

Interested in seeing how much an e-Billing and spend management solution can save your organization? Find out how much SimpleLegal can save you.

1. Timekeeper Rate Enforcement

Attorneys have specific hourly rates based on their experience and expertise, which is why you should only be paying expert timekeeper rates for expert work.

Timekeeper rate enforcement ensures that you are only being billed at the agreed-upon rate for each attorney. But manually monitoring rates across multiple vendors is time-consuming and error-prone. Automating timekeeper rate enforcement is the most efficient way to keep a close eye on who is billing you and for how much.

With automated enforcement, you can also set rate caps for each timekeeper role and firm. That way, if an attorney bills over their authorized rate or number of hours, the system will catch it. You can even set rules for automatically rejecting or reducing flagged invoices.

You can set rules based on factors such as:

  • Attorney classification level
  • Matter-level expertise
  • Agreed-upon discounts
  • Hourly caps (i.e., no more than eight hours per timekeeper, per day)

Tracking time by timekeeper also helps you forecast budget needs for future matters. You can refer to historical data to estimate expenses or leverage the information to negotiate alternative fee arrangements (AFAs) or blended rates with your vendors.

2. Matter Staffing Insights

You choose the vendors you work with for a reason; matter staffing insights ensure that your vendors have enough matter-level experts on staff to handle the workload.

Much like with timekeeper rate enforcement, matter staffing insights protect you from overpaying. Matter staffing, however, focuses on matching work with the person with the proper level of experience and expertise.

Think about professors and teaching assistants (TAs) at universities. While both professors and TAs are capable of grading a multiple-choice quiz, would that really be a valuable use of a professor’s time? Conversely, if a peer-reviewed journal needs an expert to weigh in on recent research, is that really a job for a TA?

Matter staffing insights prevent you from paying a professor (high-level partner) for TA (associate) work.

Timekeeper Activity By Practice Area And Vendor

Tracking the amount of matter-specific work you send to outside counsel also allows you to predict future staffing needs, both internally and externally. For example, if a vendor has only one attorney who can complete matter-specific work, you may need to find additional law firms to avoid relying on a single attorney.

Insights could also highlight a need for additional in-house experts. For instance, if your patent matter spend increases by 20% every quarter, it may be prudent to recruit more intellectual property experts for your department.

3. Billing Guidelines Enforcement

Legal billing guidelines, also known as outside counsel guidelines, define expectations for invoicing and payment. Sending vendors your billing guidelines is only the first step. If you want them to be effective, you’ll need to confirm receipt and define a process for enforcing the rules.

First and foremost, always require a signature page to confirm receipt. You might want to require initials next to particularly important clauses as well. While you can’t force outside counsel to read the guidelines line by line, you can get ahead of future disputes by requiring a signature page.

It’s important to remember that, without a system for enforcement, attorneys will have to check each invoice for guideline violations. Rejecting and reducing invoices manually is time-consuming. These challenges often lead to legal and finance departments simply accepting that billing guideline violations are part of the process.

With SimpleLegal, you can link your billing guidelines to the invoicing process. Once you set your rules, the system will automatically:

  • Flag rule violations, such as unauthorized UTBMS codes
  • Route flagged invoices to the proper person for manual review
  • Reject invoices with guideline violations
  • Reduce invoice amounts to adhere to guidelines

Again, this kind of automated enforcement gives you tighter control over your legal spend and eliminates a lot of manual work.

4. Workflow Automation

Manual processes lead to silos — invoices get lost in someone’s inbox, budget approvals get delayed, etc. And, when you don’t have a standardized process for handling different tasks, high-paid staff end up wasting time on low-value admin work.

Consider all the steps you go through when setting up a new matter. It might look something like this:

  • Collect information about the matter
  • Input data into your matter management system
  • Assign internal and external people to the matter
  • Track progress until completion

In reality, there are probably hundreds of other small tasks that will add up to hours of your valuable time. With workflow automation, you can decide how you want to handle the new matter intake process and automate the grunt work.

Established workflows create predictability. When the process is laid out ahead of time, you create a single source of truth. Everyone involved knows where to look for documents, how long each part of the process takes, and who they should talk to if there is a delay.

Invoice workflow automation is a great example. Because invoices often require sign-off from several people, it’s easy for them to get held up. Workflows allow you to automatically push the invoice through the process. Plus, if the invoice gets stuck somewhere, you’ll know exactly who to talk to about it.

This process also feeds into your accruals management. When you can see all of the invoices in a central location, regardless of their payment status, it’s much easier to predict upcoming spend.

How Much Could Your Legal Department Save?

Narrowing in on how to increase productivity and optimize spending with these four factors is easier than you’d think. We designed a simple Savings Calculator that lets you plug in information, such as your outside counsel spend, in-house staffing salaries, and current control (or lack thereof) over a few key areas.

In just a few clicks, you can discover how much money you could save by leveraging SimpleLegal for spend management. Take a few seconds to try it out — it’s free to use and could help you save hundreds of thousands each year.