Looking for ways to trim your legal spending? Don’t just count the dollars going out; assess the value coming in, as well.
Outside counsel can be a lifesaver. They deliver extra legal firepower when you need to provide a qualified outsider’s perspective on your company’s legal matters. But as everyone who has hired outside lawyers knows, the costs can run up quickly.
As a national legal recruiter, the team at BarkerGilmore has heard our share of outside counsel cost overruns. But it doesn’t have to be that way. Consider these strategies:
- Look for ways outside counsel can deliver enhanced value at little or no additional cost. For example, some law firms offer their corporate clients access to a hotline that lets clients ask questions on matters that do not require expensive partner time.
- Use benchmarking to validate prices. Just as your purchasing department wouldn’t order equipment without comparing prices, you should weigh the costs of compensating in-house lawyers versus hiring from the outside. The Association of Corporate General Counsel recommends benchmarking studies (an example is the Real Rate Report, a collaboration of ELM Solutions, and CEB http://www.wkelmsolutions.com/products/2015-real-rate-report) to help gauge where your salaries and outside legal counsel fees stand in relation to industry averages. Information gives you bargaining power and shows that you’ve done your homework. Ultimately, it provides a means to garner more competitive rates.
- Adopt a formal process to measure the output and effectiveness of your outside counsel, such as matter management and e-billing systems that check billable hours against budgeted hours.
- Establish and communicate clear, well-defined expectations to get the most out of any lawyer you hire, whether they work inside your office or not. Use focused metrics including these:
- Workload and productivity. Track caseload, average number of open matters, average cycle-time per matter, number of attorneys assigned to each matter, outside spending and spending compared to budget for each team member
- Outside/inside spending vs. company revenue. Consider total company revenue, versus outside legal spending and inside legal spending, which equates to the total worth of each employee
- Spending by matter type and business unit. Litigation may require more spending than employment and labor matters, for example. Properly tracking this budget breakdown will help reveal whether your legal department is asking the right questions and effectively allocating resources
Remember to review and update your outside counsel guidelines regularly. Make sure they reflect preferences, such as using a less senior or less specialized attorney when appropriate. Use the most experienced staff only when necessary to reduce costs.If you find your outside counsel isn’t adding game-changing value it may be time to talk to the experts at BarkerGilmore about enhancing your in-house legal department. We blend the passion of a boutique firm with the tools and data of the largest national recruiters to help ensure you get the most out of every legal staffing dollar you spend. Click here for more strategies to rein in legal spending.