How to implement Legal Spend Management in your in-house department?

Published On : July 8, 2022

Legal spend management is the practice of tracking, analyzing, and optimizing the operating  expenses that are incurred by your in-house legal departments and all the external agencies  they outsource their legal work to. It also involves creating and maintaining systems to keep  track of exactly where you spend your money and identifying opportunities to optimize  expenses. 

The following are some ways through which you can quickly and successfully implement Legal  Spend Management in your organization: 

Centralize spend data 

Collecting all your legal department’s spending information in a central location makes it  easier to analyze your data and to spot trends / opportunities in corporate legal spending. If  your spending data is scattered across multiple applications, your team will have to switch  between apps when working with data, thereby resulting in increased chances of human  error and reduced individual and team productivities. Again, having centralized data  means consistency, security, quicker reporting, improved strategies, and ultimately better  execution of plans. 

The best place to house all your spend-related data is in good legal spend management  software. Legal spend management solutions are cloud-based corporate software that allow  general counsels and in-house legal ops professionals to monitor and manage their legal  matters, vendors, spends, and documents, and then create customize and flexible reports, all  from a central dashboard. 

The end result? Instead of using Microsoft Excel to maintain spreadsheets, Tableau for data  visualization, and QuickBooks for invoice management, you will use just one software  application that will deal with all of it. 

Some spend management solutions also allow you to request budgets from outside counsel plus track and approve invoices. That way, you’ll have comprehensive records of your budgets  in relation to actual spends, if and when you need to analyze your spend to budget in the  future.

Set a budget for your legal department 

Implementing corporate budgets also help you benchmark and control your corporate legal  spends with ballpark figures or estimates. Once you operate within a pre-defined budget, you  automatically start to question how much certain vendors cost and whether they are earning  their keep. 

As a general guideline, you can follow these steps to set useful budgets for your in-house legal  department: 

♦ Analyze similar expenses from previous years to get an idea about approximate figures / estimates for the current period – Annual administrative fees (e.g., corporate filing fees)  and pre-existing alternative fee arrangements (e.g., flat fees) will stay the same, so it’s quite  safe to budget these expenses at the same amounts. For all the other expenses, you can use  current and past estimates. This initial budget is meant to serve as a starting point you’ll  continue to tweak. 

♦ Communicate with people from other departments to spot potential issues that may  later affect spends – Some common scenarios that may give rise to new fees include new  product launches that will need filing of patents, trademarks from the product departments,  joint ventures, or partnerships (both internal and external) in marketing and promotion. 

♦ Talk with external counsel to get estimates for predicted tasks – Ask your vendors/ other  financial experts what the costs for upcoming matters would look like. 

So, to conclude…. 

It’s easy to understand now that by analyzing historical data and talking to vendors and  stakeholders, you can easily create a budget that accounts for recurring as well as predicted  and one-off legal matters.