Sneak Preview of a New Study on Effective Legal Spend Management in 2017
Monday, April 24, 2017
Posted by: Mary Mack
This week’s guest affiliate article is brought to you by Jim Gill, Content Manager at Exterro an ACEDS Gold Affiliate partner. You may recognize Mr. Gill’s name as he is a frequent contributor to Exterro’s blog, including the Friday funnies series contributing eDiscovery humor each week to our community
Despite all the talk about spend management and cost containment by law departments over the past 10 years, there has been very little research about what actually works. In Spring 2017, Blickstein Group and Exterro collaborated on a study to change that and determine what strategies are most effective for managing legal spend.
This is the first ever survey of its kind, with respondents made up of general counsel, legal operations professionals, and in-house e-discovery managers nationwide, taking place between February-April 2017. Respondents are from companies of all sizes, with annual global revenues ranging from over $50 Billion to those with less than $500 Million. Most of these respondents have a legal spend of more than $25 million per year.
Following is a sneak preview of some early results.
The main trend the study revealed was that the majority of Law Departments are expecting spending in 2017 to be reduced or remain flat, even though there is no expectation for a decrease in workload. Overall, companies are trying a lot of things to control costs and are generally doing a fairly good job. The tried-and-true tactics are working best (outside counsel guidelines/engagement; e-billing enforcement of guidelines; automated invoice review), but there are always new areas to test, as well as many opportunities within e-discovery to significantly reduce costs.
Ways Companies are Controlling Legal Spend
First, there is great value in collaborating with law firms, with many companies successfully negotiating rates or discounts, leveraging Alternative Fee Arrangements (e.g. flat fees instead of hourly billing), and setting limits on the ability of firms to recover for disbursements (e.g. copies, prints).
Many companies are finding alternative legal service providers (ALSPs) to be effective as a substitute for law firms, but less than half of those surveyed are making a concerted effort to use them.
Shifting work in-house is also continues to be very effective, with more than half of respondents saying they would do so if possible. Other ways that in-house teams are controlling legal spend, according to the survey besides bringing more of the process in-house are: using a single-source provider or preferred provider program; negotiating lower rates from providers; and introducing the role of Litigation Executive to oversee the entire e-discovery group (including IT).
Finally, the only way to truly bring about change is to measure it to see what’s working and what isn’t. The survey reflects this with a clear push towards using advanced analytics for more visibility into a team’s e-discovery process. Ways that companies are attempting to do this include employing artificial intelligence, data mining, and other software tools: Early Case Assessment, Document and Contract Automation, and tracking Resource Allocation, Matter Budgets, and Overall Discovery Costs and Legal Spend.
The study showed that Law Departments have gotten pretty effective at spend management so that work can increase while spend goes down. Billing guidelines, electronic billing, etc. are still most effective tactics, followed by working differently with law firms (e.g. PPNs, AFAs). And there are a lot of new strategies that are working for many, such as alternative legal service providers and using advanced analytics. But according to this survey, the best way to control e-discovery spend is close management, either by bringing the process in-house or single sourcing it.
For a more in-depth discussion of these findings, check out this on-demand webcast hosted by Bloomberg BNA, with commentary and analysis by:
- Jim Michalowicz, Senior Manager - Legal Operations Business Performance, TE Connectivity
- David Yerich, Esq., Director of E-Discovery, UnitedHealth Group
- Brad Blickstein, Principal Blickstein Group
- Bill Piwonka, Chief Marketing Officer, Exterro