June 06, 2023

 Dan Lomax

best practices flexible resourcing law department law firm

Staffing spend typically accounts for most of a law organsation’s budget, making labour costs the top candidate for savings. Yet opportunities to do so are often few and far between because budgetary constraints and profit pressures have already forced general counsels and managing partners to trim headcounts to only indispensable legal professionals – in-house lawyers who perform necessary activities (e.g., compliance, contracting, etc.) or firm lawyers with high utilisation and adequate profitability.

Consequentially, law leaders face a dilemma: reducing costs is imperative, yet further staffing cuts impact mission-critical objectives. Resolving the paradox requires re-conceptualising staffing expenses. The crucial point is that staffing is not a monetary cost (i.e., salary, benefits, rent, IT equipment, software licenses, etc.) but a matter of value (i.e., costs versus benefits compared to alternatives).

The Four ‘Rights’ of Optimising Staff Value

In the context of legal professionals, value consists of function, duration, and location. No one hires a lawyer; people secure the appropriate legal expertise to address a specific need for a set amount of time in a particular place. Consequentially, trimming staffing costs is about optimising staffing by achieving the ‘Four Rights’: the right legal professional, doing the right work, at the right time, in the right place.

The concept of the Four Rights leads to new opportunities for improved staffing efficiency (including cost savings). The critical question in staffing shifts from, ‘What will fall to the wayside if I cut this position?’ to, “Does this legal need demand a highly experienced lawyer working full time on an ongoing basis in a specific location?’ Rarely is the answer an unqualified ‘yes.’

Getting to ‘yes’ for all four ‘rights’ – that is, optimising staffing value – involves four steps:

1. Prioritising Legal Needs

If you do not understand the importance of a particular matter in ‘the grand scheme of things,’ it becomes difficult to assess whether you are paying too much for the lawyers doing the work. Prioritising matters means categorising them as either:

• Mission-Critical (e.g., bet-the-company litigation or a law firm’s defining offerings)
• Risk-Mitigating (risk-minimising work, e.g., regulatory compliance, document review, etc.)
• Run-the-Business (ongoing, necessary work: subpoena response, contracting activity, etc.)

Categorising each type of matter enables you to calibrate staffing expenses to matter priority and risk and have your full-time lawyers focus on the most strategically-impactful work.

2. Determining Needed Legal Expertise

The staffing cost of a lawyer reflects the lawyer’s most valuable expertise. If that expertise is irrelevant to or beyond what a matter requires, you will pay a premium without a corresponding benefit. To avoid this, law organisations should systematically specify the expertise necessary for a particular type of legal work and then hire a lawyer with the appropriate expertise and minimal expertise in irrelevant areas (especially those in high demand).

Law organisations should also examine the types of work particular matters involve. Significant savings are possible by standardising processes for high-volume, lower-risk work that requires only limited expertise – or only rarely requires escalation to a more experienced (i.e., costlier) practitioner.

3. Forecasting Matter Life

Endless litigation and compliance requirements aside, nothing lasts forever. Optimising legal teams means predicting how long matters will last and forecasting future legal needs. Whenever possible, a law organisation should avoid hiring legal professionals on a full-time basis for projects likely to conclude soon (e.g., a merger, eDiscovery, etc.) or types of matters with wide swings in workload. Flex staffing allows a law organisation to quickly ramp up and ramp down teams so that the costs match the volume of work and matter length.

4. Selecting Staff Location

Most law organisations seek local candidates by default. Technology and the growing acceptance of the work-from-home paradigm make this largely unnecessary. Moreover, with many corporate offices and most law firm offices located in areas with a higher cost of living, significant savings are possible by using suitable talent located in lower- cost locations.

Whatever the fiscal pressure on a law organisation, general counsel and managing partners often have more of an opportunity for cost savings than they realise. By thinking systematically and comprehensively about their legal staffing needs, law leaders can achieve greater value, whether by getting ‘more bang for their buck’ or reducing costs, or both. Clarifying the priority, nature, and duration of matters and seeking non-local talent, law organisations can right-size their legal teams in all the ways that matter.