Three roadblocks impacting in-house legal cost control and how to overcome them with more effective legal spend management

Recent research has shown it’s now more important than ever for legal teams to manage both their internal and outsourced legal work effectively.

The 2023 State of the Corporate Legal Department Report (Thomson Reuters) found that 41 percent of legal departments anticipate higher legal spend in the coming 12 months; while the 2023 Law Department Management Benchmarking Report (ACC) found that more than half a legal team’s work is staying in-house.

It’s evident there is a need for an effective solution to spend management that factors in the bulk of legal work.

With this in mind, we’ve identified three roadblocks that may be impacting the ability of legal functions to achieve effective spend management and cost control, and provided solutions as to how they can be tackled.

1. Not getting a return on your e-billing investment

Understandably, legal teams want to control legal spend, but what can unexpectedly get in the way is when the very tool used to control spend isn’t delivering the return on investment you thought it would.

The need for visibility into legal spend and efficiency in reviewing and approving invoices turns many in-house legal teams to a dedicated e-billing point solution. Which is understandable as the features and functionality are built expressly and almost exclusively to handle e-billing and invoice review from outside firms.

The potential roadblock however is uncovered in the 2023 In-house Legal Technology Report, where only 18 percent of in-house legal professional respondents said they use the full functionality of their dedicated e-billing platform. Survey respondents also communicated concerns about lack of integration, lack of adoption, and an overall greater cost to the business. This indicates that either it’s too difficult to get the value they thought they would get from their dedicated e-billing system, or they didn’t need all the bells and whistles of a narrow and deep piece of technology. This is a critical consideration at a time when budget pressures are increasing.

On the other hand, not having any specific means to monitor legal spend can come with its own hidden costs, such as time lost manually entering invoice data into spreadsheets or scrolling through email inboxes, and a lack of visibility into overall legal spend.

There is a positive way forward – a way to control legal spend with less risk of hidden costs or low return on investment. There are solutions out there, such as a legal workspace, which provide the necessary capabilities to control spend without posing as significant a risk of features not being required, or costs and overhead incurred that can decrease return on investment, or slow adoption. A legal workspace provides the critical features enabling increased invoicing efficiency, giving you the necessary data and visibility to manage spend and optimize outcomes.

ROI aside, roadblocks can also come in the form of inefficient in-house legal workflows.

2. Your legal spend management solution doesn’t support internal workflows

A big part of controlling legal spend involves streamlining how outsourced legal workflows are managed. But often the tools used to do this only manage outsourced work, not internal work, introducing inefficiencies and thus cost in other parts of the in-house legal workflow.

Handling invoices from external counsel and legal services providers is often inefficient and slow and can carry significant administrative overhead and risk. And it can be hard to manage RFPs, scope and collaboration with law firms without the necessary tools. Email threads have proved inefficient and risky, as supported by the 2023 In-house Legal Technology Report, which found that 28 percent of survey respondents spend three or more hours per day searching through emails to determine contract, matter history, or advice from outside counsel.

Understandably then, there is demand from legal teams to streamline invoicing workflows and the management of outside counsel with legal technology to create a more cohesive and efficient workflow – from selecting a law firm, defining scope and setting expectations, and collaboration on a matter, to reviewing and approving invoices. The goal being to save valuable legal time, make it easier to review and spot errors, and enable faster approval processes.

This is where our second potential roadblock arises. With the desire to streamline a specific workflow – the spend workflow – legal teams are often drawn to a dedicated e-billing point solution, as described in the section above. The thing to watch out for here is that such solutions don’t necessarily allow you to manage internal workflows, such as intake and triage, matters and contracts. In such a case, internal work is left to email and spreadsheet, or to yet more point solutions.

Leaning on multiple systems for external and internal work introduces significant inefficiencies, as evidenced by the 2023 In-house Legal Technology Report which found that 44 percent of in-house legal professionals using dedicated e-billing platforms are concerned with the lack of integration. It also found that significant time is wasted switching systems – 61 percent of legal teams spend over one hour per day jumping between systems to gain a complete view of work and determine priorities.

With nearly half of legal work being completed in-house (2023 ACC Law Department Management Benchmarking Report), using no technology for internal work is not an option either. On top of internal matter and project management, contract management and CLM solutions are a significant source of work and top of mind for legal technology buyers.

Therefore, while many legal teams and legal operators want to save time on managing outside counsel and invoicing with dedicated e-billing solutions, they can experience heat loss elsewhere in other workflows.

Many legal functions would benefit from having the ability to seamlessly integrate e-billing and spend management workflows with other workflows in a way that will save them time and effort.

Luckily, there’s a better way forward for this. By adopting a legal workplace solution, you can manage external and internal workflows in a single system – gaining spend management and invoicing workflow efficiencies without sacrificing internal workflow; and without the need to bolt further solutions onto your tech stack. LawVu’s spend management capabilities enable streamlined invoicing with e-billing and collaboration with outside counsel alongside all other internal matter, contract, document, and knowledge management. No fiddly integrations, no bouncing between systems.

Better yet, streamlining these capabilities enables consolidated reporting for more than just invoices – with a legal workspace, reports on matters, contracts, and spend are all in one place making for rich data and insights, fast reporting, and better decision making.  Next, we look at collaboration with law firms and LSPs.

3. Lack of ability to collaborate effectively with LSPs

Roadblock number three to effective legal spend management arises where a reliance on spreadsheets and email, or a dedicated e-billing point solution with a strong invoicing focus, can result in a lack of ability to control expectations and manage relationships with firms from the outset.

The ability to set expectations with law firms early enables in-house legal teams to be on the front foot, assisting to reduce law firm invoices in a proactive manner – rather than just relying on invoice management after the fact. Collaboration and good relationships ensure any fish hooks can be addressed before they become problematic, saving a lot of time – and time effectively equals money.

Crucially, LawVu’s spend management capabilities are designed specifically for in-house legal professionals, with a proactive approach in mind. This means that aside from all the practical tools you need to dial-in your invoicing and spend management, there is a full suite of tools to supercharge collaboration and set expectations with law firms early in the relationship, reducing the likelihood of incorrect invoices and returning time and control to your in-house legal function. More specifically, collaboration features include:

• the ability to add LSPs to your legal workspace and the flexibility to work with different providers in a variety of different ways
• easy-to-use scope management tools that are simple for the legal team to adopt
• sending RFPs and managing responses
• an intuitive way for LSPs to collaborate with you inside your legal workspace on external matters

Controlling spend will always be important to in-house legal teams and legal operations, so avoiding roadblocks that can get in the way of reducing costs and getting the efficiency gains desired is crucial. Legal teams should carefully consider the right option for their needs taking into account return on investment, external and internal workflows, and collaboration with LSPs.

Have we piqued your interest?

If you wish to learn more about overcoming these roadblocks, how to improve your engagement with outside counsel and take control of unruly legal spend, or consolidate your tech stack, LawVu’s spend management capabilities might just be the ticket.