Even before Covid-19 struck, law departments were under crushing pressure to control costs and increase efficiency. Now, the situation is more urgent.
According to the 2020 Legal Department Index, 79% of 200 Fortune 1000 legal departments reported a dramatic increase in workload and a 19% reduction in departmental staff. Complicating matters further, 43% of respondents said more and more legal matters unfamiliar to them are crossing their desks.
Legal and compliance departments need to catch up with the rest of the business to meet the heightened expectations of the C-Suite. While they do more with less, they also need to move faster, think bigger, and sharpen their vision into day-to-day operations. More than ever, they need to understand all sources of external spend, effectively manage outside counsel, measure supplier efficiency, and review invoices with superior accuracy.
None of this is possible without having a handle on your data. But you need more than information. You need insight that inspires strategic decisions and results in increased efficiencies, cost savings, and revenue generation. Basically, GCs and CCOs need superpowers: X-ray vision into their operations.
In all seriousness, insight-inspired legal and compliance departments win the day. Research shows they increase productivity by 20 percent while operating costs fall by 25 to 45 percent. Delivery times accelerate by 63 percent and digital contracting generates revenue 35 percent faster.
Inadequate access to insights is the barrier between GCs and CCOs and a more effective legal and compliance department. Lack of technology is partly to blame, but even when spend is managed through a single eBilling platform, executives are still unclear on efficiency leakage.
It takes a cultural commitment to translate information into insight. It begins with admitting that you can’t run a digital legal and compliance department without having control of virtually every piece of data. In fact, that is only the beginning. Once you capture it, you need the capacity to clean it and make decisions from it with confidence. You must be all in on making data-powered decisions. Here are four ways you can expand insight into your legal operations with increased business intelligence:
Conduct a Legal and Compliance Spend Analysis – A spend assessment is an independent lens into exactly where every dollar is being spent—outside counsel, third-party providers, technology, etc. It tells you where you are overpaying, and immediate opportunities for savings and operational enhancements. The results are powerful. At UnitedLex, we analyzed $100M worth of legal spend for a Fortune 500 technology company, identifying a 23% savings opportunity via three transformational levers.
Update Your Billing Guidelines – Your billing guidelines are a charter for your relationship with external suppliers and should be a critical asset for managing and enhancing your relationships with third-party providers. Lack of adoption of these guidelines leads to inconsistency and leakage almost 100% of the time.
Implement a Digitally-Enabled Invoice Review Program – An effective invoice review program is the foundation for any legal operations department. Why? If designed correctly, it provides all the strategic data in a useable format to drive business intelligence and opportunity forecasting for the legal and compliance departments, while removing administrative burdens.
March Towards Activity-Based Costing in Legal – Managing budgets and forecasts is an incredibly important part of legal operations. However, this does not validate the effectiveness, nor value of what is being purchased. Working to implement an activity-based costing model for predicting and managing costs is a great step.
If you only have time to do one, do the spend analysis. It can lead to concrete recommendations, most of which can be acted on immediately to create real cost savings, fund transformation initiatives, and reduce administrative burdens.
If you would like to learn more about conducting your own spend assessment, visit our Spend Assessment and Maturity Benchmarking web page.