Budgets come under mounting pressure at the start of every financial year, and the legal function is no exception. Setting workable plans has become critical, now that legal teams are asked to deliver more with fewer resources than before.
The paper sets out seven proven strategies for reducing legal costs, most of which can be implemented quickly and without touching team size.
They are presented below, with our notes on their practical effect:
Run a competitive process (a request for proposals) on matters above a set threshold — the paper suggests twenty thousand dollars as a guide, though each organisation should set its own. Competition is the only way to be confident of the prevailing market price: even proposals sought from three firms of the same tier can differ widely on cost.
Defining the matter in sufficient detail before instructing allows the firm to estimate fees accurately and forecloses later claims of 'out of scope' work. Ask the firm before engagement: what further information do you need to give an accurate estimate or a capped fee? And what items do you expect to fall outside the current scope?
Nothing wastes more time and money than agreeing an estimate and a scope, then letting the work drift without documentation until the invoices come in higher than expected. Sound practice: whenever the scope changes, the client is notified formally and in writing of the revised scope and its price, retaining the right to approve, decline or negotiate.
Hiring may look at odds with saving money, but it is a legitimate strategy: using an in-house lawyer instead of external counsel on recurring work does deliver savings. Lighter options exist too — a fixed-term lawyer, a secondee from a firm, a junior lawyer, or a commercial/procurement specialist to handle routine contracts.
A large share of the legal function's time goes into taking instructions: emails back and forth, triage and allocation, before any work actually begins. Improving intake alone — even saving half an hour a day per lawyer — makes a substantial difference over a year and frees time for higher-value work.
Work is often sent to top-tier firms simply because that is what the function has always done, or on the strength of an existing relationship. What is needed is to review the data and understand the trends: consolidate high-volume routine work and place it with mid-tier firms, or reduce the number of firms in favour of deeper relationships that support better price negotiation.
Some technology solutions consume months in implementation and disrupt how firms work. Better is a solution that deploys quickly and delivers immediate savings: covering the full workflow, easy to configure to the organisation's procedures, comfortable for external counsel to use — and ideally trialled in a four- or six-month pilot before full commitment.
The paper offers a range of options for reducing legal spend without reducing headcount, and warns that the worst choice is inaction. The better course is to start with one strategy, measure its effect, evaluate it, and then move to the next.
Adapted and edited by Taahoud Law Firm from a working paper titled "7 Strategies to Reduce Legal Spend Now (Without Reducing Headcount)" published by Lawcadia; some examples have been reframed for the local context. Intellectual property rights in the original text remain with its publisher.
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