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How Law Departments Can Maximise the Value of Their Legal Spend

February 16, 2024

law departments technology Flexible Legal Resourcing

No law department can afford to overpay for legal services, but getting the most ‘bang for the buck’ from legal spend on outside counsel has never been more challenging. Law department budgets are stagnant or shrinking; ever-expanding regulatory requirements and compliance obligations mean even more work for already-overburdened staff; the pressure to ‘do more with less is intensifying. Meanwhile, many law firm billing rates are at historic highs, driven by record salaries coupled with the imperative to maintain (or even increase) firm profits. The present economic uncertainty in the UK only compounds the difficulty.

Despite the pressing need to get more value from outside counsel, not all law department leaders are fully aware of the alternatives. Three stand out as particularly cost-effective:

Legal Technology Platforms: Technology-driven legal solutions can significantly reduce costs by providing automated document generation, contracts management, and even basic legal advice at a fraction of the cost of traditional legal services.

In-House Legal Presence: For law departments with ongoing or project-specific needs, using an in-house professional or engaging an interim lawyer can lower costs. The interim route provides greater cost control.

Fixed Fee Arrangements: Fixed fee arrangements – whether with a firm or an interim lawyer — can provide cost predictability. (For detailed expert guidance on fixed and other alternative fee arrangements, check out my colleague Erica White’s three-part series here, here, and here.) These agreements can consist of a set fee for specific legal services or a capped number of hours for a project. These approaches provide transparency and avoid the uncertainty of outside counsels’ traditional hourly rate approach.

It is important to note that these three approaches are not ‘all-or-nothing’. Any of them can work in concert with existing outside counsel, who often have institutional knowledge and working relationships that may add value in particular types of matters. It is best to think in terms of how a combination of approaches can complement each other and provide synergistic benefits rather than conceive of things in all-or-nothing terms.

It is also worthwhile to explore the possibilities for additional savings by engaging law companies that offer managed services (e.g., for IP, eDiscovery and document review, compliance, etc.), legal operations professionals, and software. Often, a combined approach – legal talent, managed services, legal ops, and technology – delivers quick savings, both monetary and in terms of freeing up law department legal professionals to focus on more complex internal matters.

For cost-conscious law departments, the advent of alternative legal services providers (aka law companies) and the explosion in legal tech platforms are a godsend – provided law department leaders investigate using these powerful alternatives to relying exclusively on law firm outside counsel.

For law departments seeking to maximise the value of their legal spend, three options can replace or augment outside counsel: technology platforms, interim talent, and fixed-fee arrangements. Even better outcomes are possible with a law company with solutions spanning talent, managed services, legal operations, and technology.

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