Cutting Legal Costs

Published: 16 Jul 2018 Average Rating: unrated Print

Author: Tim Cummins

Workload for the average law department has grown, but this has not made them immune to pressure for improved cost control and reduction. Achieving this can be challenging, especially since spend management discipline is not an innate competency within these departments.

To succeed, in-house legal must undertake greater analysis of current expenditure, as well as finding alternative delivery methods. A new study by IACCM indicates that most cost reduction efforts have focused on spend with outside-counsel – understandably since this is the largest area of expenditure, but with the risk that such a focus misses wider opportunities for innovation.

To date, alternative delivery methods such as increased automation or use of low cost providers have been limited – and surely must be set to increase. Indeed, recent research shows that more than 70% of large in-house legal groups anticipate the introduction of new technology[1] – but few seem clear on what that technology will be or what purpose it will serve.

Even though there is such a strong focus on cost reduction, the relationship between Legal and Procurement functions remains at best tenuous and those legal groups that do engage Procurement report mixed results. The main exceptions appear to be when the Procurement resources are embedded within Legal; this closer alignment generates increased trust and shared objectives.

Based on this and other research, IACCM offers two observations:

  • The major impact of new technology is likely to come from investments outside the Legal function. One will be through broader business initiatives such as RPA (robotic process automation) and blockchain, where lawyers will become more integrated participants in overall business processes and data flows. The other will be through external providers offering technology-enabled services (systems using artificial intelligence, natural language processing) such as litigation support, M&A analytics, contract standards and benchmarks and 'big data' analysis.
  • Legal departments are conflating increased value with lower costs. While cost reduction is important, it is not in itself a source of business value. To date, many in-house legal groups have not adequately examined their role and contribution in the context of the strategic goals of the business. As a result, they will struggle to demonstrate 'value-add' in a wider business context and to show a meaningful return-on-investment (ROI). Without such data, the pressure on cost reduction will continue.

[1] Source: HBR Consulting June 2018

This blog is extracted from an IACCM survey report, 'Legal Department Spend & Resource Management', to be published in July 2018.


Related Discussions

Please sign in or register to post on this forum
2019-07-28 06:49:22


For Agreement between the Parties of differnet origin , the aurgument starts up on Jurisdiction and governing law for the AGreement. while both the Parties are interes...
Replies: 4

APM Group
2014-09-14 13:08:25

Recent UK Legal chnages

I was told recently about a change to UK Law affecting contracts and the length of time and the quantity of evidence that had to be retained as a result. Please can s...
Replies: 3

KEO International Consultants
2020-05-26 13:02:59

Negotiation effectiveness

What are the fundamentals and effective tools to be taken into consideration before negotiation meetings. Please share negotiation cases initiated from both parties. I...
Replies: 1

Toronto transit commission
2020-03-27 15:19:59

Commercial Management Structure, Model, and Governance in Public Sector

Hi Everyone; Hope you and your loved ones are doing well and staying safe! We are in the process of Commercial Management Function establishment. We do have Materia...
Replies: 1
2020-03-11 05:47:57

FM Event - Foreseeability

Can someone please clarify for me: Australian Jurisdiction Where, in a FM clause, it defines an event which does not constitute Force Majeure as "any circumst...
Replies: 3

Pretorius Consulting
2019-09-18 17:50:21

Pricing Article Changes

Does anyone actually price changes to the Articles of the contract? For example, changing the venue for arbitration (5% of the contract value) or the change order pro...
Replies: 3

Pretorius Consulting
2019-09-18 17:43:44

10 Pitfalls to Avoid in Contracting

I note that the post is from November 2015. Would you say that the statistics for these 10 have remained the same in 2019? Is it possible to get more information abo...
Replies: 2

2016-12-01 06:07:29

Evaluating Warranty extension cost

In an EPC project, the project is delayed by employer and employer requests contractor to extend warranty. Employer agrees to provide a claim/ amendment for warranty e...
Older entries »
Replies: 4