A recent UUֱ survey, Escaping the legal labyrinth, explores how in-house teams have become more reliant on tech. The reliance follows an ongoing shift in expectations around the role of in-house counsel. Companies once required only legal expertise from in-house lawyers. But today’s in-house teams must add strategic value, support overarching business goals, and contribute to commercial outcomes, alongside the provision of legal expertise.
The various expectations can lead to unmanageable workloads, especially when in-house teams are unable to automate or streamline routine, repetitive tasks. In many cases, in-house teams outsource a great deal of work to external law firms, spending money due to the absence of time and sufficient resources.
In this article, I explore how in-house teams can cut costs by embracing legal tech, boosting productivity, and exploring new billing methods.
The traditional model of providing legal expertise does not focus on how lawyers contribute to driving revenue revenue, or adding huge commercial gains to a company. Indeed, many of the legal functions once associated with in-house teams – such as contract management, billing and invoicing, sifting through case law and other legal information – are time consuming, but not considered part of the ‘strategic priority’ for the legal function.
Unfortunately, if this type of legal work is not automated or made more efficient by using modern legal technologies, legal departments can find that most of their staff’s time is taken up with such work, leaving little time for the ‘value-adding’ activities that in-house lawyers want to focus on. Instead, more complicated legal work is outsourced directly to external law firms, absorbing the bulk of the legal budget and creating a negative reinforcement loop.
But that is money that in-house teams do not need to spend. Embracing legal tech can help streamline and automate such low-value jobs, either freeing up time or reducing external law firm costs. Efftichia Dower, senior legal counsel at and contributor to the UUֱ survey, said Onfido automates low-value tasks, reducing costs and allowing lawyers to focus on interesting and challenging work: ‘As in-house lawyers, we are true business partners and can be excellent “eyes” on myriad projects across the business. In Onfido, this ranges from the big-ticket commercial deals, to helping with launching new products in a frictionless way.’
The right investments in legal tech can help in-house teams reduce their spend money on law firms. And much of that tech depends on external experts, but at a cheaper cost. Consider, for example, that law firms and lawyers define, create, and contribute to legal guidance platforms such as UUֱ Practical Guidance. This practical content is linked directly to underlying case law in UUֱ, which speeds up and simplifies both low- and high-value legal work. Indeed, recent researched carried out by the University of Manchester on behalf of UUֱ found that lawyers using Lexis+ (which combines Research and Guidance into a platform) saved 8 minutes and 41 seconds on average per legal task, which adds up to potentially 8 ½ hours over the course of a week. By , in-house teams can reduce reliance on (often expensive) external firms and rely instead on (often cost-efficient) tech that utilises the knowledge of external firms.
Legal tech allows in-house teams to spend less time on low-value legal tasks, more time on problem-solving and decision-making tasks, and simultaneously reduces expenditure on external law firms. Legal tech, in short, has the potential to free up time and drastically improve outputs. It is no surprise, therefore, that nearly three-quarters (74%) of respondents to the UUֱ survey said that boosting productivity was the biggest benefit of legal tech today.
In-house counsel may still need to rely on external advisors and firms for certain tasks. But there are ways of cutting costs in that area, too. In-house teams are increasingly looking at alternative fee arrangements (AFAs) and move away from the billable hour.
That’s part of a larger trend in the legal sector. The billable hour has been the default billing method for decades, used as a way for firms to charge clients and measure performance. But that model has come under considerable scrutiny, with critics suggesting that it encourages inefficiencies, provides poor return on investment, and creates perverse incentives.
A recent UUֱ report, Calling time on the billable hour, explored how clients are turning to AFAs. Examples of AFAs include flat fees, , which means agreeing a price in advance of a project. Other popular AFAs include capped fees, fixed fee per matter, fixed fee by phase, retainers, volume discounts, and blended rates.
In-house teams can benefit from exploring AFAs, if they are not already. found, for example, that 81% of in-house teams have used AFAs to reduce costs. The benefits of AFAs rely on more focused incentives. Firms and lawyers, depending on the AFA, are pushed to deliver greater value, minimise risk, and focus on finding faster solutions.
The key for in-house teams is to find the best billing methods to suit their needs. As expressed in the UUֱ report, different work may be suited to different billing methods. Flat fees and capped fees, for example, do not work well for unpredictable legal work, as they commit a set or maximum price for work that parties may have over or underestimated.
The key is to explore options and find the best AFA for the work you need completed. That should provide another route to cost-cutting for in-house teams, as well as providing better incentives and a greater return on investment. In-house teams should aim to understand the work they need, find the best billing method for that work, and proceed with an external firm.
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