The Top 10 Tips for a Cost-Effective Legal Department

By Aditi Mukherji, JD on June 05, 2013 | Last updated on March 21, 2019

Attaining a cost-effective legal department doesn't have to be a corporate pipe-dream, according to a new analysis by the Corporate Executive Board. CEB surveyed 180 in-house departments around the globe and examined the corporate practices of departments with the highest and lowest expenses. What they discovered were efficiency trends every legal department should watch for.

Here are the top ten tips for a cost-effective legal department:

  1. Perform more legal work in-house. A reliable tool to trim the financial fat is to have in-house staff roll up their shirt sleeves a little further up and do the work outside counsel currently manage. Unless you're in the throes of serious litigation or specialized matters, CEB recommends your spending habits hover around 40 percent outside spend/60 percent inside spend. If you want, contract it.
  2. Use non-lawyer professionals more often. Changing protocols can be tricky, but if you currently have a system that makes attorneys perform routine and administrative tasks, you might be wasting time and in turn, money. Streamline processes like contracts by giving more responsibility to non-attorney professionals.
  3. Invest in legal operations capabilities. A legal operations manager oversees budgeting, technology selection, vendor management, and career development. Investing in a talented one can save you big in the long-run.
  4. Invest selectively in legal technologies. Matter management and e-billing technologies are apparently helpful, according to CEB's analysis. Document management solutions, not so much. Use what works, shed what doesn't.
  5. Unbundle legal services. It's becoming popular to pick apart the law firm service bundle on administrative matters. Consider going à la carte on other activities, like M&A due diligence, legal research, and patent filing.
  6. Focus on litigation matter budgeting and oversight. As the largest area of the in-house legal budget, it's crucial to budget for litigation costs and give them close oversight. A surprising number of companies never bother to set a strict budget.
  7. Use smaller law firms more often. Generally, the size of a law firm mirrors its hourly rates. A mid-size or small firm with quality counsel can lighten your wallet without short-changing expertise or quality.
  8. Reduce the number of law firms. Concentrate your costs to your top ten legal work suppliers -- it'll pay off.
  9. Be judicious with alternative fee arrangements. More than having an alternative fee arrangement, carefully review how your legal department monitors and administers fee arrangements.
  10. Self-assess -- constantly. Revisit your routine periodically, benchmark your budgets, and slash when needed. Don't get complacent!

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