Legal Spend Management is a strategic discipline that allows corporate legal departments to have control over outside counsel spend and other legal costs.
Legal departments process: review, finalise and approve many invoices from outside counsel annually. If there is no systematic process of managing them, or worse, if the process is manual, expenses’ management will not only require dedicated staff, but it will also be time consuming and erratic. Indeed, business tend to overpay firms by 5-10% annually due to undetected errors. Having manual or unreliable systems to enforce billing standards will end up incurring more costs for your business.
A legal spend management program is often the best way for self-insured organisations to keep legal costs under control and ensure they only pay what they owe on legal invoices.
5 ways legal departments can use technology to streamline and structure legal spend management and optimise related processes and workflows.
1. Centralise all types of legal expenses
Streamlining legal spend management starts at the centralisation of all the legal expenses of your company in such a way that all the internal and external expenses are consolidated in one place. By centralising legal expenses in one platform, you can gain complete, consolidated visibility into expenses that are reported or directly derived from data in a contract, litigation or IP case. Simply put, regardless of where the expenses originated, if they are structured, you can have a full overview of them.
You can differentiate between effective and forecast expenses to manage expenses as they incur in real time and anticipate future expenses. By having control over each expense, you can track its current status and allocate a target budget to each legal expense to monitor its budgetary impact.
2. Structure your legal budgets
With a LSM tool, you can create your annual budget and manage it granularly by defining sub-budgets centralised in one or more consolidated budgets. You can automate budget consolidation in such a way that when an expense is declared, it will be deducted in the related sub budget and its consolidated budget. You can anticipate closing the budget by having an updated financial synthesis at all times with full visibility into your consolidated budget and forecast.
3. Set up alerts to track legal expenses and budgets
Once your expenses and budgets are centralised in one platform, you can set up alerts to be notified about the status and when action is needed. For example, you can receive notifications when a budget or an expense reaches a certain amount or when an expense needs to be approved. This will help you anticipate the financial stakes proactively.
4. Use dashboards to manage legal expenses and budgets
By managing legal expenses and budgets on dedicated dashboards, you can have a full overview of the legal spend of your business and monitor in real time. This will help you negotiate better with suppliers based on the performance and cost and optimise the budget.
5. Use reporting tools to analyse performance
By using reporting functionalities within your LSM tool, you can generate reports such as total spend per service provider per year, total spend per month, etc. to track the budget and ensure your legal department is accountable for the expenses. You can use customisable KPIs and graphs to analyse budget activities and make well-informed decisions around legal spend management. You can also send automatic recurrent budget reports to a customisable distribution list and make sure stakeholders can recognise opportunities easily.
By implementing an effective LSM tool, you can have full control over the budget, anticipate expenses, generate reports, and make better informed budgetary decisions. You can elevate your legal department to be a strategic business partner.
Facilitates legal spend management so that you can keep track of and lower your legal expenses.