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Corporate Legal

Building support for a legal spend management system

· 7 minute read

· 7 minute read

While 41% of corporate legal departments expect their budgets to rise in the coming year, cost control is still a major concern. That’s according to the 2023 State of the Corporate Law Department from the Thomson Reuters Institute. The study found that more than half of corporate legal teams have flat or declining budgets, despite 65% seeing an increase in litigation matters. And even those that do have increased budgets need to be mindful of their spending as they shift resources to help their companies face increasing regulatory complexity.  

So even departments that have more money to work with are looking at improving their approach to spend management. They are reducing external legal spend, bringing more work in-house, and prioritizing which types of matters they pursue. 

That level of cost control requires a sophisticated approach to law department spend management. This is a complex undertaking that involves reviewing, tracking, analyzing, and reporting on both in-house and outside legal costs. Systems like Thomson Reuters Legal Tracker provide data, insights, and automation that enable remarkable cost savings, expose opportunities to handle certain matters in-house, improve the employee experience, and simplify communication with outside counsel. 

Law department and legal operations leaders can easily see the benefits of implementing a spend management system. Securing the funding and organizational support for such an undertaking requires a compelling business case with a clear return on investment (ROI).  

Before you deliver the business case, though, you’ll want to build support among key stakeholders. Socialize the problems you’re trying to solve and offer up the benefits a spend management system has for each stakeholder.  

Cost savings from a spend management system

The most compelling benefit of a spend management system is the opportunity to reduce costs. A large enterprise can see significant savings in a short time. Forrester recently completed a Total Economic Impact report on Thomson Reuters Legal Tracker. The report looked at several companies using the system and applied their experience to a composite organization.  

The study showed that an organization with $1 billion in annual revenue and outside legal spend of $50 million per year would see net savings of nearly $3 million over three years by implementing Legal Tracker. That represents a 372% ROI, with the system paying for itself in six months. Much of this saving comes from the Legal team’s newfound ability to push back effectively on rate increases from outside counsel. Legal Tracker provides trends on rates by firm size and region, so the team knows if a rate increase or even the rate they’re currently paying is not competitive. They can ask for a lower rate or shop the business to other firms. 

Those are dramatic numbers that you can use to garner support for an implementation. Senior leaders like the CFO and CEO will find these numbers especially compelling as they look to manage organization spending over the long haul. Other senior leaders will appreciate the savings, especially if it lessens hits to their own budgets. There is also the psychological benefit of knowing the company is being responsible with resources and not paying more than it needs to. 

Other stakeholders will also be moved by these numbers, but perhaps for different reasons. The Law Department team may see the savings as an opportunity to invest some of those savings in the work of the department, or to put toward projects that have been on the back burner. They may also feel relief from the pressure of potential company-wide budget or staff cuts. 

Handle new matter types in-house

The Forrester report found that companies were able to use the reporting in Legal Tracker to identify instances where billable hours are so numerous for a certain type of legal work that it makes more sense to hire an in-house attorney. In these circumstances, an internal attorney is significantly more cost-effective for the composite organization. 

Senior leaders will appreciate the added cost savings, of course. The Law Department team will look forward to growing the department. Some may see these new roles as opportunities to grow in their own practice, if they want to specialize in a particular matter type. 

Your business partners in other departments may benefit when the Legal team can handle certain matters in house. They may see faster response time or more personal attention when they can get guidance from a colleague in the organization rather than from an outside attorney. 


The Total Economic Impact of Thomson Reuters Legal Tracker

Obtain a free copy of the Total Economic Impact of Thomson Reuters Legal Tracker to gain insight on the potential benefits Legal Tracker could have on your organization.

See the ROI Uncovered by the Forrester TEI Study


Improve the employee experience with more sophisticated technology

Companies with effective spend management systems find that they can streamline processes significantly. When employees can be more efficient, they are able to spend more time on higher-value legal work.  

They may also appreciate the fact that their company values the work they do and invests in tools to help make it better. They’ll suffer less from overwhelm when they aren’t trying to keep up with countless manual tasks, worrying about overspending with outside counsel, and trying to get to the strategic projects that will really advance the organization toward its goals. 

An improved employee experience benefits the Legal team, of course. This improvement can also be positioned as a benefit to senior leaders, especially those that care about employee engagement and retention, like Human Resources and the CEO.  

Simplify communication with outside counsel

Law departments have worked hard to establish favorable terms with outside counsel. Sometimes, though, those terms aren’t reflected in the invoices. Law departments can use Legal Tracker to require firms to adhere to matter budgets. The team can quickly identify moments when firms overcharge throughout the course of a matter due to the firm’s inefficiency or internal mismanagement. From there, they can quickly follow up to ask for a new invoice. This is much simpler than manually comparing invoices to terms and having to find the right person at the firm to correct the mistake.  

Legal Tracker is configurable to follow a consistent framework for all firms, allowing the legal team to peer-to-peer benchmark and share best practices. The Forrester study found that more efficient review and management of invoices led to a 60% productivity improvement and savings of $161,000.  

Your Legal Ops team will be especially persuaded by this benefit. That 60% improvement in productivity means they can spend more time on projects that move the department forward, rather than chasing down new invoices that should have been right the first time. 

Making the case for legal spend management

It may seem like the software the Law Department uses to manage spend and communicate with outside counsel wouldn’t interest other stakeholders. But the initial investment and the significant cost savings you can realize for the company mean that this kind of initiative will get attention.  

That’s good news for you. It’s an opportunity to reinforce the great work your team does for the organization and secure positive investment to further your mission. Remember the benefits of the system and be sure to tune them to the particular stakeholders you’re talking to. Everyone will appreciate the cost savings, though possibly for different reasons. Business partners will appreciate the possibility of your team doing more work in-house. And your team will appreciate the modern approach to spend management, which makes their jobs less manual and more productive while offering opportunities to broaden their own skillsets. 

With your stakeholders on board early, the business case will practically make itself.  


The Forrester Total Economic Impact of Thomson Reuters Legal Tracker provides detail on the data and benefits presented in this article. Read the full report 

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