Corporate legal departments (CLDs) are facing economic uncertainty and budget cuts—a combination that makes controlling spend and maximizing efficiency more important than ever. And yet, despite the presence of such challenges, there’s reason to be optimistic. Savvy CLDs have a secret weapon when it comes to better managing spend: artificial intelligence.
Artificial intelligence can enable strategic spend management in several ways. By leveraging AI, CLDs can ensure consistency among law firms, improve compliance by up to 20%, and enjoy cost savings of up to 10%.
With that in mind, let’s dive into three ways that AI can supercharge spend management and help CLDs deliver more value.
Drive value-added work
Compliance is a key component of spend management. Billing errors cause spend leakage, but having a bill review team comb through invoices manually is inconsistent, expensive, and pulls employees away from higher-value tasks.
That’s where AI comes in. AI is well-suited for repetitive tasks like bill review. AI-enabled bill review finds patterns within invoices and flags likely violations for improved billing guideline compliance and cost savings. While most CLDs have some form of an e-billing solution, many are not equipped to handle complex or non-standardized billing guidelines.
With AI-driven automated bill review, there’s also a lower chance of human error during the bill review process, which prevents spend leakage. Additionally, attorneys are freed up to focus on value-added work—something that is particularly important when budgets are tight.
Gain complete visibility
Despite the popularity of e-billing platforms, CLDs are often forced to sort through paper invoices for many clients. Yet again, this pulls attorneys away from higher-value work; no one goes to law school with the dream of doing repetitive administrative tasks. But the problem with paper invoices doesn’t end there. CLDs also miss out on potential savings and full visibility into their spend when invoices aren’t digitalized and standardized.
AI can help here, too. With AI-enabled invoice conversion, CLDs can quickly and easily convert paper or PDF invoices into standardized Legal Electronic Data Exchange Standard (LEDES) formatting.
By standardizing invoices, CLDs have complete visibility. They can see what’s working, what’s not, and what needs to change. These insights play an important role in minimizing leakage and better managing total spend. Centralizing visibility and management of all vendor invoices has been shown to increase savings by up to 5%.
Look forward, not back
Finally, CLDs have collected a great amount of historical information about their firms and matters, but that data doesn’t always translate into actionable insights. While the majority of CLDs have access to data around outside counsel costs, for instance, less than half feel they are using that data effectively. With AI, they can get value from their data to better manage spend now and in the future.
More specifically, AI-powered predictive analytics help legal departments gain confidence that they’re choosing the right firm at the right price for the right matter. They can also link their internal data with industry benchmarks to develop more competitive and profitable pricing and fee arrangements.
No question about AI’s spend management benefits
There are still a lot of questions about AI’s place in the legal industry, and some confusion about which use cases are most appropriate. But one thing is clear: Using AI for spend management is a net positive for organizations’ bottom lines.
For more information about how AI can supercharge your CLD’s spend management, check out our new whitepaper: A better approach to spend management.
