Legal Spend: Findings from 2016 CEB Survey and Management Insights from Sourcing for Services

The CEB Leadership Council has published its 2016 State of the Legal Function Research Findings (get your copy of the report here). Legal and professional services category managers should take note of some key findings: 

  • 43% of legal departments from large companies reported reduced spending in 2016
  • 55% of total legal department budget spent on outside legal counsel
  • Typical large company legal department works with over 100 law firms, one-quarter of which are large firms with over 500 lawyers.

At Sourcing for Services (SFS) our experience with managing legal spend has been fairly consistent and lends to these insights:

  • Unmanaged legal spend (i.e. not managed by a procurement function) tends to be heavily clouded with data from unrelated transactions, often by as much as 50% - claims payments, insurance, risk management, lobbyists tend to be the most frequent intruders to the true picture of outside legal counsel spend.
  • Uncoordinated management and disparate engagement processes are the leading causes of outside legal counsel oversupply, which also tends to be accompanied by significant practice area overlap (i.e. wasted leverage). 
  • Bringing legal spend under effective management usually (should) always start with the development of a practice area benchmark rate card - because you cannot make headway on the savings opportunities until adequate legal coverage and ready access are properly established. 

Sourcing for Services manages legal spend categories for clients directly and through our strategic MSP partnerships, so we know that Legal can be one of those highly political, 'hands off' categories. Our approach to managing legal services, though, is one that fits well within the scope of the expanded contingent labor program model and it uniquely leverages core workflow and treasury functionality found in most major vendor management systems (VMS). 

Legal is just one of the many professional services that we specialize in managing with our Managed Services Procurement offering called MSP for SOW. Contact SFS if you need help bringing your company's (or your client's) legal spend under more effective program management.

Michael MatherlyComment