One-third of in-house leaders don’t have ‘comprehensive’ legal spend strategy

By Jerome Doraisamy|12 May 2020
Melbourne

New research has highlighted the importance of having a detailed strategy for managing legal spend across organisational units.

The 4th Annual Study of Effective Legal Spend Management – published by Blickstein Group, Exterro and the US-based Corporate Counsel Business Journal – surveyed 52 legal leaders (including GCs, legal directors, assistant GCs and managers) at the beginning of this COVID-19 crisis, focusing on how legal departments across the country are controlling budgets and what techniques are most effective for minimising legal spend.

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According to the research, two-thirds of respondents (64 per cent) do have a comprehensive strategy for managing legal spend across organisational units that respond to the GC or chief legal officer, while just over one in three (36 per cent) doesn’t.

At this juncture, the research noted, the areas with the greatest perceived risk for increased legal spend are litigation (51 per cent) and compliance (22 per cent).

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Blickstein Group principal Brad Blickstein said that while negotiating rates and discounts is once again ranked as the most effective method of controlling legal spend, “it is important to understand that negotiating is not, by itself, a strategy”.

“It is just one lever. The need to reduce spend is acute right now – even more acute than it was when this survey was in the field last month – so it makes sense to pull that lever as hard and as often as possible. But do not confuse that with a strategic approach to cost reduction,” he advised.

“For the longer-term, consider building tighter collaborations and partnerships with your firms, allowing them to be more involved and integrated into your day-to-day operations. Rather than battling over rates all the time, make them a partner and incentivise them based on what you value.

“Such a strategic approach will be much more effective in the long-term. It also may be easier than it seems to implement – if you work with firms that have bought in.”

The research outlined the “five most effective techniques” for controlling legal spend across the legal department, as identified by the survey respondents: negotiated rates/discounts, e-billing and enforcement of outside counsel guidelines, shifting work in-house, direct relationships with vendors, and volume discounts.

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One-third of in-house leaders don’t have ‘comprehensive’ legal spend strategy
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