Q1 nearly over: where is your legal budget?
A recent survey by the ACC asked in-house lawyers a simple question: Is your department spend within budget? 37 percent said no. Read the blog to learn more.
A recent survey by the Association of Corporate Counsel asked in-house lawyers a simple question: “Is your department spend within budget?”
While 54 percent said yes, 37 percent said no, and perhaps most troubling, 8 percent had no idea. In other words, about half of legal departments are either missing their budgets or can’t track them at all; not an ideal situation given that CEOs and corporate boards often view “controlling legal spend” among their top three priorities for the legal department.
We can’t imagine those 8 percent who don’t track their budgets are much beloved by their CFOs. Put another way, as the ACC notes, meeting your budget can be the first step toward greater visibility and stronger relationships with the C-suite:
“Organizational influence increases as management practices drive efficiency. It increases as innovative approaches enhance departmental performance. And it increases as the overall budget and spend numbers meet expectations.
Overall, the perception that a law department delivers value begins with the perception that it is cost-efficient. Legal departments that consistently hit their budgets are much more likely to say they ‘almost always’ meet with business leaders to discuss operational issues – statistically more often than those that do not meet their budget.”
For most of us, the end of March brings the end of the first quarter; it’s a great time to evaluate your budget and your systems – and to make sure you don’t get caught unawares.
What are the legal department budget trends for 2018?
The latest Altman Weil Chief Legal Officer Survey identified two major budget trends:
- 45 percent of law departments increased their overall budgets, compared with 36 percent that decreased them – the second straight year that more budgets grew than shrank.
- 40 percent of law departments plan to increase their outside law firm spending in 2018, compared with 33 percent that plan to cut it. (This is the first time since 2007 that more firms plan to boost outside counsel spending.)
The latter merits consideration. For most legal departments, the outside spend is the largest expense category; as Altman Weil reported, it exceeds non-law firm vendors and all internal expenditures (including department compensation and benefits, facilities and technology). But only 7.5 percent of in-house counsel say they are “very effective” at evaluating outside counsel spend.
When asked how they collect data on their department’s law firm spending, 37.8 percent said they relied on Excel spreadsheets…there’s a better way.
There's still time for a 'Q2 resolution'
You don’t have to wait until a new year to start a legal operations program. You don’t have to spend 2018 shuffling through law firm bills and cobbling together spreadsheets. Most importantly, you don’t have to spend the rest of the year worrying about budget questions you can’t answer.
With Xakia’s expense management features, you can:
- Analyze your spending by division, category, law firm and other metrics to understand and manage your expenses.
- Invite your law firms to submit bills directly.
- Integrate with e-billing systems, creating comprehensive dashboards and reports.
Watch the webinar: The art of the law department monthly report
Watch our webinar on demand and learn:
- How to craft meaningful reports for two audiences:
- Company executives and board members
- General counsel and legal management
- The most relevant information for each audience
- Best practices for producing the report – without adding more work or stress
We will look at a case study from Transurban that shows how the company compiles and shares its monthly reports – and the benefits they have generated.