Is controlling legal spend the new top priority?
A new survey suggests that, for the first time in many years, controlling legal costs rather than simply reducing them is front of mind for law departments.
Legal spend analytics and matter tracking platform Apperio has released a new report, titled The Legal Spend Landscape for 2022, which surveyed 300 senior legal and finance leaders in financial services who are responsible for overall legal spending in their organisation.
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The report – while focused on law departments in financial services institutions – offers interesting insights into how such teams in other sectors may also be viewing their spending as we move into the new year.
It found that law departments are “emerging from the pandemic with greater recognition of the value they deliver to the business”, Apperio proclaimed, with seven in 70 respondents (71 per cent) saying that the legal team is “more valued” (38 per cent) or “much more valued” (33 per cent) as a result of the age of coronavirus.
Moreover, three in five (59 per cent) respondents said they were the decision-maker around legal spend, while 41 per cent were part of a team of decision-makers.
Such recognition was especially present in those outside of the law department – 40 per cent of CFOs said that the law department is “much more valued” compared to pre-pandemic, in contrast with 29 per cent of general counsel and chief legal officers.
Apperio founder and CEO Nicholas d’Adhemar said: “That the in-house team is more valued, not just by their own standards, but also by their peers in finance, speaks volumes to the legal department’s role in helping financial services firms navigate risk in an uncertain landscape.”
Such an increase in the perceived value of the law department is especially pertinent for those corporate counsel, Apperio noted, given other findings from the survey.
Respondents to the survey noted that the legal workload (70 per cent), legal department headcount (66 per cent) and overall legal costs (67 per cent) have all grown over the last three years. One in four respondents said each area has “increased significantly”, which was quantified as growth of greater than 20 per cent.
When asked about legal spend priorities for the next year, respondents put controlling costs (60 per cent) and better leveraging data to make decisions (55 per cent) at the top of the list, while reducing internal legal costs (17 per cent) and reducing outside legal costs (14 per cent) ranked at the other end of the spectrum.
“For the first time in many years, reducing spend is not the top priority for legal departments, but rather there is a strong desire to have better visibility and control of spend,” said Mr d’Adhemar.
“GCs and CFOs alike are willing to pay for good counsel, but they want to be in full command of that spend – that means they can’t wait for an invoice to inform them how much work has been carried out or how costs have accrued.”