In the EY Law Survey of 2021, the top strategy for “substantial or very significant cost reduction prospects” was a “greater use of technology.” Using cutting-edge legal software increases efficiency, minimises human errors, and aids busy legal operations teams in their various responsibilities—especially legal spend management.
Corporate legal departments can save money by using a comprehensive legal expenditure management solution. By 2024, most general counsel (GCs) aim to stay focused on cutting legal costs, and this technology will help departments achieve their goals.
You may use legal expense technology in four primary ways to improve your ability to manage legal costs:
Double-checking timekeeper rates is done by the legal spend tech.
At the beginning of 2020, the average hourly rate for a lawyer is $300. Overbilling by timekeepers can quickly build up to thousands of dollars in unnecessary legal costs if they are not scrutinised.
Legal expenditure management software helps to alleviate these issues by automating timekeeper rate enforcement, which enables you to swiftly identify and rectify any instances of overbilling or billing with an inaccurate timekeeper rate. Manually reviewing hundreds of invoices is the strongest defence you have without this technology. As a result, costly rate issues are more likely to go unnoticed.
Legal operations can set rate caps for each timekeeper function and law firm using automated enforcement. Bill “padding,” where companies overcharge to make up for time spent on non-billable labour, is also prevented. According to the American Bar Association, approximately 21% of attorneys engage in this practise. When someone invoices for more hours or at a higher rate than they are authorised to, it can save money in the long run by alerting the appropriate authorities.
Invoices that have been identified can be automatically rejected or adjusted based on characteristics such as:
- There are different degrees of classification for attorneys.
- Matter-specific knowledge
- Discounts agreed upon
- Hourly rates (i.e., no more than eight hours per timekeeper, per day)
It’s easier to forecast future legal work budget needs when timekeeper hours are tracked centrally by legal IT. It is possible to negotiate more predictable alternative fee arrangements (AFAs) or blended rates with your vendors by using this data in conjunction with concrete facts.
Legal spending technology monitors matter metrics.
Because of the complexity of legal issues, it’s difficult to tell which providers are doing their jobs successfully. So that you can see if your providers are providing the best value, legal cost technology tracks key matter information.
Legal software, for example, aids in ensuring that providers are adequately staffing matters. You can see this in the classroom, when a lecturer is assisted by an assistant (TA). It is possible for a professor to grade a multiple-choice quiz, but would it be a good use of his or her time to do so? That said, is it possible to be an expert in the field of study for a peer-reviewed journal?
You may see a breakdown of the work being done on a case in great detail using legal software. This data allows you to spot any potential issues before they become a problem and work with your suppliers to remedy them. It’s time to stop paying a high-level partner to accomplish work that a lower-cost associate might do!
Legal cost technology also helps the bottom line by keeping track of how long it takes providers to close problems. You can use data from similar cases to estimate a fair turnaround time for a law practise. If your vendors continually go above and above your expectations, it may be time to cut ties with them.
In addition, data on your most frequently used practise areas can help you balance in-house counsel with outside counsel more effectively. So if your patent matter spend increases by 20% every quarter, it may be more cost-effective to hire in-house IP professionals on a salaried basis rather than contract out the work to hourly-rate companies.
Billing guidelines are enforced by legal spend technology.
Legal operations teams employ legal billing principles to help “outside counsel produce more cost-effective, reliable, and efficient legal services,” says Emilia Levisay, a partner at Ballard Spahr LLP. Internal departments and vendors benefit from clear standards on how to deal with legal concerns and billing from outside counsel.
Only 23% of law firms, on the other hand, say they “always” employ a formal procedure to analyse and document client expectations. Accruals may be sent late, or invoices may be wrongly prepared, because of this. Manually enforcing billing criteria among several providers, on the other hand, is difficult and prone to error. It’s easy to overpay for a product or service that you don’t need.
Fortunately, legal expense technology simplifies this process.. Simply enter your outside counsel criteria into the system, and the platform will flag or automatically return submissions that don’t meet those parameters automatically or mark them as non-compliant.
It’s possible that the legal spend tech will flag any vendor who files an invoice with an unlawful UTBMS code. The flagged invoices are automatically sent to a predetermined approver, which speeds up the review process even further. This type of automation reduces the amount of time spent on manual tasks while also allowing you to keep a better eye on your legal budget.
4) Legal spending technology enhances spending reporting.
Legal teams must collect and evaluate legal spend data using spreadsheets and outdated tools if they don’t have access to legal spend management software. These time-consuming materials are typically riddled with inaccuracies. According to IBM, 88% of spreadsheets have at least one inaccuracy. When putting together C-suite legal spending reports, this puts you under more strain.
Because it acts as a single point of truth and is always up to date, legal spend technology alleviates some of this anxiety. Spend statistics, including the overall amount spent on different legal suppliers and monthly variances between actuals and accruals, are automatically tracked and easy to access. Using a variety of sources with variable degrees of data accuracy makes it far more difficult to achieve this level of expertise.
You’ll have more confidence in your ability to provide relevant business insight to upper management with improved spend supervision. By using integration, it’s easy to verify the accuracy of the data you’re receiving. Because all of your data is kept in one place, you’ll save a lot of time when it comes time to compile your reports.
Inquire as to how much money a legal technology investment could save your firm.
We know that your C-suite will want to see quantified evidence of the benefits of using legal technology before they approve a substantial investment in technology..” SimpleLegal’s comprehensive legal management solution offers a unique ROI that can only be calculated using our savings calculator.