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Legal Spend: Have Law Departments Got It Right?

Posted by Tim Cummins, President of IACCM, Professor, Leeds University School of Law; Chair, International Commercial & Contract Management | Mar 8, 2019 6:01:00 AM

The 2018 HBR Consulting report on in-house legal spend contains interesting data. It reveals a continuing, if modest, increase in budget and a tendency towards increased headcount. Of the various efforts to increase efficiency, the adoption or use of technology appears the most prevalent. Meantime, the hourly rates of outside counsel apparently continue to increase.

Efficiency or effectiveness?

What I find most interesting about the data is the apparent acceptance that sustained workload increase is inevitable and that the response to this must focus on efficiency. And even this acceptance of the need for greater efficiency is not supported by evidence of any great sense of urgency. Although 49% of survey respondents say they have a spend analytics solution in place, there is no evidence from the data that in-house groups are considering ways to reduce workload.

Is trust the issue?

Most business functions are under sustained pressure to reduce costs. They do this in a variety of ways that include technology adoption, outsourcing and use of lower cost resources. Legal groups recognize each of these methods, but in reality their use remains limited. However, another favored technique is workload elimination – and mention of this is completely absent from the HBR report. It’s almost as if in-house groups are saying “workload increases are inevitable; we can’t work differently and we can’t trust others to do the work for us”.

In reality, a significant proportion of legal work is repetitive. Because of the way lawyers work, they create differences – for example in the use of words or structure of forms. It is also easy to exaggerate the scale of difference – for example between jurisdictions or within individual situations – that then requires individual review or judgment. A refusal to delegate, to introduce playbooks, to focus on standardization often appears more driven by self-interest than business interest.

The data is not encouraging

IACCM is currently conducting a survey that explores the use of self-service contracting. This is one method that is often discussed as a way to reduce legal workload. The study seems likely to reveal that ‘discussion’ is about as far as it goes. Meaningful efforts to tackle legal workload – and the consequent bottle-neck that is created – are not immediately evident. Will the growth of Legal Operations teams – especially those which are populated by non-lawyers – change the dynamic and at last lead to truly new thinking and methods?

Topics: commercial management, organization & people

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