Thanks to the impact of climate change, the risks associated with data security, regulatory challenges across geographies, and uncertainty within global economies, energy industry legal teams are currently facing significant unpredictability. This adds a layer of difficulty to the already tricky task of keeping spend in check while maintaining optimal legal department performance. At a high level, our advice is to focus on three areas that strongly impact the ability to control spend: legal bill review, law firm panel management, and outside counsel budgeting. When these three core aspects of your spend management program are optimized and healthy, you will be better positioned to take on unexpected economic challenges and weather them with minimal legal spend leakage.
Here’s why we feel strongly that focusing on these capabilities can help:
Legal bill review: Billing guidelines are integral to your spend management program. Although outside counsel firms agree to these guidelines when you engage them, it is common for firms to violate these guidelines if your team does not make an active effort to enforce them. The end result is that you pay more than you have agreed to for the services provided. By tightening up this very common legal ops weak point, legal departments typically see immediate improvement in spend control.
Panel management: The goal of a law firm panel is to ensure that the legal team engages the right outside counsel firms for each of their matters. When your panel management approach is strong, legal professionals are better able to identify those firms that provide the most value to your organization. The choice of panel firms is therefore closely tied to your legal department’s performance and ability to achieve the company’s business goals. A data-driven approach can help give your team confidence in the firms they choose to work with.
Budgeting: Budgets give legal departments a level of predictability on matters that is particularly critical to the complex task of financial planning during economically tight times. A regular comparison of budgeted to actual spend empowers legal teams to respond quickly when a matter is not progressing as planned. Budgets also give you the data you need to identify opportunities for cost-saving measures, such as alternative fee arrangements.
Legal departments in any sector of the energy industry can benefit from a well-managed spend control plan, especially amid economic and legislative uncertainty. Improving the central facets of your plan is a reliable way to cope with instability. To read more about how enterprise legal management can make an impact on energy companies, visit our energy industry page and explore the options.
