Last week, SimpleLegal sponsored the ACC Annual Meeting where thousands of in-house counsel, legal technology providers, and ACC members from around the nation gathered in Washington, DC. Among the dozens of educational sessions offered was a presentation on achieving legal operations excellence, which we highlighted in a blog post on top ACC sessions for forward-thinking counsel.
The speakers, Jessica DeBianchi Rivera, Vice President & Senior Counsel of Bankrate Inc., Beth O’Callahan, VP, Corporate, Compliance & Employment, and Innovation Services at NetApp, Richard Dammery, Chief Legal Officer and Company Secretary at Woolworth, and Michael Tucker, General Counsel at Avis Budget Group, shared their experiences with implementing new or revamped legal operations processes.
From their case studies, we extracted three pitfalls that in-house legal teams want to avoid when building an efficient and scalable legal operations function.
Pitfall #1: Engaging Law Firms with Non-Transparent Pricing
The relationship between in-house and outside counsel is changing. Legal operations have newfound ability to control costs by leveraging:
- Outside counsel billing guidelines to curb the pass-through of firm overhead charges
- Flat fee or alternative fee arrangements (AFAs)
- Standard negotiation processes to reduce friction during negotiation processes
The traditional model of relying on outside counsel to set fees is no longer sustainable for modern legal operations teams that face increasing pressure to reduce costs. Legal operations that identify that it’s now a buyer’s market capitalize on the opportunity to lower legal spend while strengthening the relationship with each law firm they engage.
Pitfall 2: Being Afraid to Bring Work In-House
Legal operations departments looking to get a hold of legal spend benefit from a thorough assessment of outside counsel. In many cases, analyzing historical information related to outside counsel work allows legal operations to identify when it would be more effective to increase internal headcount and bring work in-house. Advantages of shifting work in-house include:
- Standardization of and control over process and workload
- Tighter governance of the budget by area (i.e. compliance, liability and workers’ compensation, litigation)
- Increased visibility into costs
Outside counsel assessments also expose the law firms that value innovation and are focused on culture, project management skills, client satisfaction, communications practices, and commitment to diversity. Keeping an eye on this ensures legal teams and their law firms have aligned business goals.
Pitfall 3: Only Leveraging Data for Cost Management
Legal data is all the buzz among legal operations departments and for good reason – data doesn’t lie. Legal e-Billing software helps in this regard, making every dollar of legal spend transparent. Legal operations are then better positioned to positively control costs, and also have better insight into:
- Efficiencies of each business function, firm, or individual attorney
- Understand the fair market value for outside counsel work
- Which law firms are aligned with business practices
- Ways the legal department can lead strategic business projects
Data is a starting point for understanding how the legal department operates and interacts with partners to drive better decision making. Data is a way to tell legal’s story.
Overall, the session provided valuable insights for building the legal operations function, and the Q&A session exposed additional best practices and strategies. We had a great time attending this session and were proud sponsor the event. We’re already looking forward to next year’s ACC Annual Meeting in Austin, TX!