April 30, 2024

 Rob MacAdam

trends software elm law department consulting legal operations law department legal spend management

With Las Vegas almost in sight, this third instalment of our ‘Road to CLOC’ series examines the challenge of aligning legal spend management with the size and scope of a law department’s operations. Our focus is on smaller departments, the use of traditional spend management systems, and the rise of game-changing streamlined tools. These tools – tailor-made for leaner operations and lowering legal spend – are recalibrating the balance between functionality and usability and ushering in a new era in spend management.

Whatever a law department’s size, managing legal spend effectively is a critical priority. However, for a department with spend on the lower end of the spectrum (e.g., between $5m-$20m), the established spend management solutions can seem overkill. These comprehensive, complex systems offer robust feature sets far beyond the needs of smaller legal teams. Moreover, their cost – both in dollars and the time, effort, and technical expertise needed – and complexities in deploying and using them decrease ROI below the threshold for cost-effectiveness for smaller law departments. The result has been a ‘market gap’ that has driven a new wave of legal spend management tools designed around the needs of smaller, simpler law departments, especially ones that are growing significantly. These solutions are changing how legal spend is managed with an accessible, cost-effective alternative to their more cumbersome predecessors.

The Challenge with Large Providers

Traditionally, legal spend management solutions have come with several unavoidable challenges:

• High Cost:The sizeable financial investment – hefty initial setup fees, ongoing maintenance costs, and the dedicated staff needed for system management – required with large-scale legal spend management systems is often hard to justify for departments with lower spend.
• Burdensome Complexity:Comprehensive solutions typically offer a wide array of features far beyond the requirements of smaller law departments. This often results in frustration within teams that must navigate unnecessary functional complexity to locate and use the relatively small set of tools they actually need. Moreover, underutilisation of unneeded features drives down ROI.
• Lengthy Implementation Time:Deploying a large system often proves to be a lengthy process involving significant time for customisation, training, vendor onboarding, and operational adjustment. For smaller teams, this time investment significantly detracts from their bandwidth for core legal work.

The Emergence of Simpler Tools

These drawbacks have spurred the emergence of a new breed of legal spend management tools designed around the needs of smaller law departments. With their combination of affordability, simplicity, speed of implementation, and ease of use, these tools are an attractive option for legal teams seeking to manage their spend and operational costs without the unavoidable overhead of a complex system.

The key features and benefits of these new tools include:

• Cost-Effectiveness:Streamlined functionality means these tools come at a lower cost than more complex solutions. This affordability makes them feasible for law departments with limited budgets and means a high return on investment.
• Focused Functionality:These simpler tools concentrate on core functionalities needed for effective spend management, such as invoice processing, guideline enforcement, budgeting, and reporting. The result is that law departments obtain the essential spend management tools without the clutter of non-crucial features likely not to be used.
• Fast Deployment:Simpler means faster implementation, which results in law departments achieving improved spend management far sooner than a more comprehensive system can provide.
• User-Friendly Design:These new-generation solutions prioritise ease of use and feature intuitive interfaces that require minimal training. This user-friendliness ensures that legal teams can start managing spend more efficiently almost immediately. It also eliminates the time and expense of the extensive training necessary with large and complex systems.

Each of these drives better ROI. When combined, the synergies between them can mean even greater value.

What Simpler Means for Law Departments

The emergence of simpler legal spend management tools is a significant shift in how law departments can approach their financial management. As law departments increasingly recognise the superior value of focusing on core needs, the demand for these streamlined solutions seems certain to grow.

For small and growing in-house legal teams, these tools have an outsized impact. They offer an unprecedented opportunity for a cost-effective and practical way to gain control over legal spend, improve budgeting accuracy, and enhance financial reporting without the overhead of a complex system. As these tools continue gaining traction, they will play a pivotal role in democratising access to legal spend management technology and enabling law departments of all sizes to operate more efficiently and effectively. More and more, such systems will become de rigueur for smaller law departments.

My colleagues and I are keenly interested in hearing the views of and eager to exchange insights with legal operations professionals concerning the rise of these simpler legal spend management tools. We expect next month’s CLOC Global Institute to include such conversations – see you there!