It’s a perennial winner: “Controlling outside legal costs” is the top priority for corporate legal departments once again, according to the Legal Department Operations Index from the Thomson Reuters Institute.
The good news is you don’t have to sort it out on your own. By using an industry-leading spend management system, you can streamline your efforts and realize significant savings.
The need for a leading spend management system
Seasoned law department pros know that controlling outside counsel costs is complicated. You need strategies for keeping work in-house and efficiently using alternative legal service providers. You need a point-of-view on alternative fee arrangements versus the billable hour.
And then you have your dealings with the law firms themselves. You often have less pricing information than your law firms do. And when it comes time to check that the bills match the agreements, you and your team are in a time crunch and can’t always spot the errors.
Controlling spend has evolved into a sophisticated discipline within legal departments, with LDO leaders establishing best practices and working with the legal tech industry to align software capabilities to these approaches. Some of the best practices include making data-driven decisions, understanding the market rate for each type of matter in each region, getting standard timekeeper rates and reasonable rate increases, ensuring that your invoices match the billing guidelines.
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These thought leaders have helped technology companies develop best-in-class spend management systems that can save your organization significant time and money. And you don’t have to go it alone.
Best practices in spend management
Leading legal teams have adopted several best practices to manage their spend effectively. These include the following:
- Make data-driven decisions: Leading legal departments are leaning into using data to assess and improve all aspects of their operations. Spend management is no different. Having access to extensive and historical data for your own spending as well as for the rates and pricing practices of law firms in your area can help you make better decisions for your organization.
- Understand the market rate: When timekeeper rates increase or you’re considering working with a new firm, you have traditionally been blind to market rates in your negotiations. Leading legal teams rely on systems that look at a vast pool of legal spend data to select, negotiate, and manage outside counsel.
- Secure standard rates: Using your spend management system to set and maintain standard timekeeper rates for your outside counsel will help you with forecasting and budget control. The more variation in these rates, the more complexity you’ll have as you calculate your future spend. Using a leading spend management system will give you visibility into the current range of rates and provide benchmarking data to help you bring them all in line.
- Ensure your invoices match the billing guidelines: Implementing ebilling and invoice approval automation will enable you to save time and reduce errors. You will eliminate paper approvals and automate currency conversion, timekeeper rate enforcement, expense compliance, and alternative fee arrangements. Leading legal teams use their systems to manage communication and invoice corrections with their outside counsel.
Case study: Supporting cost control, growth, and innovation
Ohio-based AtriCure is a fast-growing company founded on innovation. The company’s legal team has adopted industry best practices and uses Thomson Reuters Legal Tracker Advanced for spend management and e-billing.
Prior to implementing Legal Tracker, the team had no e-billing capability, and they tracked most billing and financial data manually. However, the company was growing fast, and the team needed to optimize and scale to support that growth. They implemented Legal Tracker to help automate tasks and solve major pain points, such as accelerating rate reviews, streamlining invoice review, and creating greater visibility over spend.
Melissa Bodner, director of Legal Operations, reports that the team has:
- Dramatically reduced the amount of time it takes to conduct timekeeper rate reviews
- Used the data and insights to negotiate better rates with law firms
- Streamlined forecasting and budgeting
- Automated their invoice review
“Essentially, Legal Tracker Advanced is paying for itself,” Bodner says. “It saves a huge amount of time. And the insights it gives us help us negotiate better rates with law firms.”
A shorter path to your spend management goals
Managing outside counsel spending will continue to be a high priority area for in-house legal teams. The corporate counsel community is rallying around this priority. Working with industry tech partners, it has established best practices that can help your organization save significant money, be sure your rates match benchmarks, and validate that your invoices match your terms.
By choosing a market-leading spend management tool, you are choosing a tool that puts you in line with these best practices and offers a shorter path to reaching your goals for controlling outside counsel costs.
Legal Tracker Advanced from Thomson Reuters is the industry leader in spend management software. Find out how it can help your legal team better negotiate with and manage invoices from your outside counsel.
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