We recently hosted a webinar with HBR Consulting (pretty smashing webinar, if we do say so ourselves) on “Cost Certainty in Uncertain Times.” What does that ringer of a title (again, a ringer, if we do say so ourselves) actually mean? How does this relate to legal spend and legal procurement?
Greater Cost Certainty for Legal Spend
“Cost certainty” in this context means greater insight and transparency into forecasting and budgeting for legal matters. This can entail reducing the billable hour model in favor of more value-driven, ‘certain’ models which promote efficiencies and desired results from preferred firms (as opposed to the effort from the billable hour - by the way, PERSUIT empowers our clients to transition away from the billable hour to value-driven pricing strategies, but that’s beside the point).
The Legal Industry During Covid-19
What about “uncertain times?” We believe that today, many aspects of business (and life) remain uncertain. With the volatility of the financial markets changing on a daily basis due to the impact and uncertainty of Covid-19, large public companies are feeling unprecedented pressure to maintain value to their shareholders. This applies to legal departments within these companies. Legal departments must also maintain value, and they’re searching for strategies to do so.
What did the webinar teach us?
- There are shifting priorities for legal teams since COVID-19, toward cost and spending. Significant reductions in legal fees and legal spend are needed. A data-driven approach to cost-optimization during this economic downturn is a strategically beneficial approach.
- In light of current needs, not having a formal legal procurement process in place borders on negligence (per BLC’s 2020 Market Intelligence Report).
- Law firms have a fixed labor capacity over certain periods and thus experience peaks and troughs in terms of case capacity , depending on a given time’s volume of inbound work.
Why were these top 3 takeaways important for the legal industry?
- In order to make significant reductions in legal spend, there is an increasing interest in shifting toward stricter billing guidelines, increasing usage of Alternative Fee Arrangements (AFAs) and competitive bidding as standard practice principles for the procurement of external legal services.
- The formal legal procurement process is a step away from the ‘Old Boys Network;’ relying solely on personal relationships is no longer adequate. As legal departments are being tasked with taking greater ownership of their department spend and budget, they have a responsibility back to the business to ensure due diligence when it comes to cost optimization.
- Law Firms’ varied case capacity can play a huge role in pricing strategies with your preferred law firms, yielding cost certainty and predictability.
Why were these top 3 takeaways important for PERSUIT ?
- Since significant reductions are needed, legal departments are looking for quick, scalable measures that deliver quantifiable savings back to the department, without disrupting the day-to-day lives of their attorneys. This is exactly what PERSUIT was built on, and delivers: cost optimization without compromising quality.
- In order to maintain a formal legal procurement process, legal departments need the right tools and processes in place to maintain full control over the evaluation and selection of outside counsel; all while satisfying the procurement principles to ensure cost discipline to the organization. PERSUIT’s technology and Client Success team provides these tools and processes, tailored to a client’s specific needs.
- Law Firms’ fixed labor capacity and thus varied case capacity allows for negotiated discounted rates, which act as a ceiling. PERSUIT’s real time bidding allows your firms to easily pass along additional savings as a result of excess capacity during a volume trough.
Conclusion:
Cost certainty during these uncertain times is pivotal. Companies are looking for significant reductions in legal fees and an effective legal procurement process, and insights regarding law firms’ case capacity help frame subsequent pricing strategies. As the legal industry continues to pay attention to these needs, PERSUIT gets ahead.
https://youtu.be/5hgQ6fPUrqU