June 14, 2023

 Erica White

Staffing Consulting AFAs efficiency recession

The fear of a recession alone can lead law organisations to slash spending, cancel projects, cut staff, and curb IT purchases. But, rather than default to a ‘slash and burn’ approach (and the disruption it unavoidably brings), law firms and law departments can economise by focusing on innovation and process improvements – all without spending more money, launching expensive new projects, hiring more personnel, or purchasing costly new systems and technology.

Finding new ways of doing things saves time and money immediately and in the future and positions a law organisation to emerge from a recession better positioned than other law departments and law firms.

Practically every law organisation can find opportunities for savings and greater efficiency in one or more of the following areas:

Evaluating existing systems and their cost. Are your systems (for matter management, CLM, billing and law firm invoice review, etc.) manual or automated? Is the software you use still commercially available? Does it still meet your needs? Will it do so in three years and beyond? Sometimes, switching or automating systems delivers immediate cost and labour savings that will continue indefinitely. So can customising or updating a system or integrating existing or new capabilities. Beyond reducing costs, such changes typically free up lawyers and staff to spend more time on higher-value work while also improving employee morale (thereby cutting expenses due to staff turnover).

Outsourcing with ALSPs. Before you balk at the cost of engaging an alternative legal services provider, think about value. Increasing spending on a law company often saves more than enough to cover the cost. Law companies have delivered net savings to organisations like yours and can provide ROI estimates (provided you ask them to!).

Implementing innovative fee arrangements. Hourly billing has been the go-to for a long time, but other fee arrangements (yes, like AFAs) are gaining popularity. Some of these arrangements can reduce administrative burden, saving time and money; others add transparency and predictability to help law departments and law firms alike – especially in uncertain economic times. Historical data analysis can help identify opportunities for implementing innovative arrangements. These efforts require careful design, implementation, management, and performance tracking, but if done well, the cost of those activities is likely to pale in comparison to the benefits.

Streamlining internal processes. Rarely does an efficiency analysis fail to identify opportunities to simplify and accelerate a law organisation’s processes. Greater efficiency and reduced costs can come from something as simple (and inexpensive) as better educating your employees, business partners, clients, and outside law firms about your contracting process, matter intake and management procedures, and other workflows. Other ‘quick wins’ are possible through, for example, consolidating contract templates and creating a clause library. Often, service providers (such as ALSPs) have time-tested, highly-efficient processes for ongoing ‘run-the-business’ work, such as invoice review.

Digitalising and standardising your legal project management. Many parts of the project management process are the same regardless of a particular project’s size or complexity. You may already have systems, procedures, guides, workflows, and templates to streamline numerous processes. Doing so means greater efficiency across a range of activities and results in less wasted time, more savings, and better outcomes! So can digitalising good processes detailed in playbooks no one ever bothers to read. Automating manual processes usually costs money, but also usually quickly pays for itself by increasing project success rates, accelerating cycle times, raising client and internal customer satisfaction rates, and reducing time spent repeatedly recreating certain types of documents.

For anyone tempted to dismiss the suggestions above as financially infeasible, you might be surprised. Redeploying in-house staff can enable you to implement changes that deliver immediate savings. ALSPs and legal consultants can also help you identify and evaluate near and long-term savings opportunities before you spend anything on process improvement.

As the saying goes, if you know how to swim, you need not fear water. For the leaders of law departments and law firms concerned about a possible recession, learning how to innovate and improve processes goes a long way in eliminating the fear of what the future may bring.