3 Key Ways to Reduce Legal Costs Through Competition

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As a GC, you encounter much outside of your control - changes in regulations, C-suite turnover, industry transitions. Your legal department is expected to adapt to these changes and operate efficiently despite external obstacles. What you control is how your department handles an ever-changing slate of legal needs. A sure-fire way to earn the respect and attention of the C-suite and the board is in reducing costs, even as the legal demands of your business expand. Throughout my career, I held myself accountable for not just the execution of high-caliber legal services, but for the costs incurred as well. Drawing on the inherently competitive nature of the legal field can drive your department forward while managing costs.

Employing competition to reduce costs is as simple as asking why, when, and how.

Using Competition as Leverage

Lawyers in America are a competitive lot. The academic standards to enter and complete law school necessitate high-performance over many years by individuals hoping to become attorneys. Once licensed, attorneys --whether vying for partnership, tenure, or title -- immediately and continuously experience rivalry with fellow members of the bar.  While competition among attorneys and their firms is not ordinarily cutthroat or contentious, the evidence is overwhelming that beneath the silky surface of professional courtesies the competitive forces of winning and/or keeping a good client are churning. Leveraging competition throughout your legal department will keep your team motivated to succeed.

When Competition For Legal Services Works

Establishing a meritocracy throughout your legal department fosters growth and creates an environment in which your attorneys, paralegals, and support staff will thrive. In time, this reputation will contribute to attracting and retaining legal talent. I channeled the competitive streak in my legal team by regularly recognizing and rewarding top performers, and extending competition to the engagement of outside counsel. Introducing competition to the hiring of outside counsel builds accountability for an outside firm’s costs and outcomes, and delivers value on top of expertise. There are times when engaging external legal counsel is unavoidable, whether to balance the workload or for their specific expertise. Avoid outside counsel becoming a costly burden by setting expectations for competitive proposals, and conducting informed negotiations.

Look at The Data

A General Counsel has a fiduciary responsibility to provide the highest-quality legal services, and this is impossible without consistent and reliable information from both in-house and outside legal teams. Collecting and comparing departmental data - including outcomes, time spent per task, and expenditures - will allow you to flag core cost areas and inefficiencies. When engaging outside counsel, invite proposals from qualified external firms requesting the same data points you evaluate in your own department. Use this information to negotiate the best deal for your client. External legal counsel, as a supplement to your in-house team, should be held to the same competitive standards and outcome expectations of the department that you manage daily.

Devoting more of your workday to managing costs throughout the legal arm of your business will set you apart as a holistic leader within your organization. I explore a range of cost reduction strategies that built my reputation as a GC in my paper, Corporate Law Department Cost Reduction Through Competition. In this paper, I describe techniques that allowed the departments I led to maximize output at a lower price point, without compromising staffing needs or the quality of legal services.

As the GC of Ally Financial for over 17 years, Bill Solomon is a recognized leader in the legal field and experienced in navigating changing industries. Recently, Bill joined a team of leading former GCs and CCOs at BarkerGilmore to lend his expertise in building law departments and advising rising talent. He has lectured around the world and is now an adjunct law professor at the University of Detroit Mercy School of Law.

Topics: Legal   |   Advising & Coaching

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