The idea of tracking legal spend might make some legal teams feel a little uneasy. With projects that seem to rake up billable hours and complicated billing systems, it can be hard to stay on top of your spend and make sense of all the data. 🤯
What's more, the lack of visibility and transparency, confusing fee arrangements (that are inconsistently applied), and recurring billing errors and questionable time recording behaviours are now harming the reputation of in-house teams, according to Apperio.
Tracking spend data is an expectation of modern legal teams who must pay closer attention to the budget with increased oversight from the CFO.
Considering spend data more carefully shouldn't worry in-house teams, tracking this data more effectively actually strengthens their strategy and position within the business. It not only keeps the business happy but also empowers GCs to make data-driven decisions on their outsourcing strategy and resourcing of their internal team as well as strengthen negotiations with your CFO by understanding the ROI on your spend.
Inform your outsourcing strategy
With data you can approach your outsourcing strategy with discipline and evaluate what the most efficient or cost-effective means of outsourcing are for your team.
For some, low-value contracts which can create a backlog while others struggle with complex projects which are a drain on the team's capacity. Data can provide insights where the most gains are to be made with outsourcing and who is best to outsource to.
Demonstrate your value to the business
The perception of Legal as a cost centre versus profit centre impacts budget conversations and strategy, but by tracking your spend more regularly, your team can demonstrate its value in a way the business can understand.
The value the legal team provides can be hard to quantify as it can vary from avoiding fines to opening doors to a new market and by tracking legal spend against these wins, you can challenge the misconception of the legal team as a "cost centre".
Identify when and who you need to hire
Make it easy to justify a new hire by tracking legal spend by jurisdiction and job type! By recording where significant amounts of legal spend are going, you might just find that it's enough to justify a permanent hire.
Whether it's a large amount of data protection and privacy queries or a particularly demanding jurisdiction, this spend data could give you the fire power you need when approaching your CFO about a new hire.
At Lexoo, we're making it easy for legal teams to track their spend on matters submitted via our platform. We currently provide legal spend data to our clients on request with invaluable breakdowns of legal spend per lawyer, jurisdiction and job type.