TODAY’S GENER AL COUNSEL SPRING 2018
RESOURCE ALIGNMENT IS A BIG LAW DEPARTMENT CHALLENGE BY LAUREN CHUNG
t is no surprise that cost control was ranked as the top challenge facing law departments, according to the 2017 HBR Consulting Law Department Survey. In the midst of cost pressures and increasing legal demand, the survey indicates that law departments have risen to the challenge and are effectively managing their spending. As a result, today’s law departments are keeping total legal spending flat. So, how did they do it? The survey shows that law departments took active measures to control outside counsel costs and focused on building capabilities to handle more work in house. The top three methods for effective management of outside counsel costs are implementing alternative fee arrangements, enforcing billing guidelines and keeping work in house. Applying more rigor to the management of outside counsel has become instrumental for law departments. They are demanding accountability and transparency from their law firms, which has led to tighter budgeting, thoughtful planning and regular communication. However, what stands out among the top outside counsel cost control methods is the practice of keeping work in house. The 2017 survey indicated that handling legal work in house yields the most cost savings for law departments. Over recent years, there has been increased emphasis on leveraging internal resources to change the legal service delivery model in a way that drives operational efficien-
cy and controls costs. This method has proven successful in driving efficiency. RESOURCE ALIGNMENT
As law departments face rising legal demands and cost pressures, general counsel find themselves challenged to allocate resources in a more cost effective and efficient manner. Many law departments lack a formal process or strategy to properly align work with appropriate resources. As a result, senior-level attorneys often spend a significant portion of their days performing administrative or lower value tasks instead of focusing on more strategic work. Resource misalignment creates challenges for the law department including: • Lower productivity: When the skills and expertise of the internal resources are not properly aligned and leveraged, it directly impacts the department’s productivity level. Attorneys have less time to focus on work that best utilizes their skills and advances the strategic goals of the business. • Higher legal costs: There is a direct cost impact associated with inefficient resource allocation. Analyzing the time spent by senior attorneys on work that is low risk and more complex typically reveals substantial cost incurred by the law department. • Poor employee engagement: Effectively managing legal talent is foundational to the success of an continued on page 53
Lauren Chung serves is a managing director at HBR Consulting LLP. She leads the Law Department Advisory practice and works with general counsel and law department leadership on strategic, process and operational improvement initiatives. She publishes and speaks regularly on law department management best practices and the use of metrics to demonstrate the value of the legal function. LChung@ hbrconsulting.com
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