Cost control was ranked as the top challenge facing law departments, according to the 2017 HBR Consulting Law Department Survey, but law departments are effectively managing their spending and keeping total legal spending flat. They took active measures to control outside counsel costs and focused on building capabilities to handle more work in house. They are demanding accountability and transparency from their law firms, which has led to tighter budgeting, thoughtful planning and regular communication.
Many law departments lack a formal process or strategy to properly align work with the appropriate resources. Resource misalignment creates challenges for the law department including lower productivity, higher legal costs associated with inefficient resource allocation and poor employee engagement. Resource optimization is a continuous improvement effort. This means law departments must regularly use data, risk analysis and business planning sessions to allocate in-house legal resources to the highest value functions and most cost effective usage.
A thoughtful approach is needed to enable law departments to achieve operational excellence, and ultimately take more work in house. Law departments that are striving for this goal ask themselves: Are the right resources in place to ensure work is done in the most cost-effective and efficient manner? Is the legal staff armed with optimized processes and tools? By putting controls in place and answering these questions, law departments will begin to experience more efficient staffing, streamlined work processes and aligned technology that directly correlate with better cost management.