From Surprise Cuts to Overages: Hacks for In-House Legal Budgets

Whether you need to make cuts pronto, or you're over budget (again), here are some tips to help you quickly make sense of your legal budget.

The end of the calendar year often coincides with two common conversations between the Legal Department and Finance:

  • How much can you cut before year-end?
  • You’re over budget by how much?

While critical, these conversations also come in the midst of other end-of-the-year chaos, from deal closings to contract renewals to settlement discussions, not to mention the mountain of everyday legal matters.

When you can’t drop everything to become an amateur accountant, it’s time to work differently.

Based on our experience advising, leading and serving inside in-house legal teams, Xakia has created a set of productivity hacks – ideas that can save you valuable time and resources. Some of our favorites can help you quickly make sense of your legal budget.

When you need to make cuts – now

1. Prioritize with an iron fist

List the organization’s strategic imperatives and your Legal Department’s stated goals, if you have them. Chart the tasks that are essential for the company to operate legally. Then sort your matters so your team can focus on core functions and essential services while temporarily putting non-essential projects on hold.

2. Corral your outside matters

For material projects, ask law firms for budgets for the remainder of the budget year. Compile those to see where you might need to make further adjustments – and hold your firms accountable not to exceed them. For new matters, negotiate alternative fee arrangements to keep the spend predictable.

lawyer reviewing documents

3. Look for easy wins

Review your legal spend to look for recurring charges to the Legal Department for subscriptions and services you don’t really use…or wouldn’t really miss. Perhaps your colleague subscribed to an intellectual property magazine to access an article two years ago, and forgot to cancel it. Cancel it now.

4. Consolidate your technology

It’s not uncommon for Legal Departments to have separate systems for legal matter management, e-billing, contract lifecycle management and so on. Is there a solution that could address multiple needs? On its own, that tool could cost you far less than multiple systems, and it also can bring time savings when you stop toggling between disconnected programs.

When you are over budget (again)

1. Perform a mini-audit

Identify where you are spending your money. For the sake of troubleshooting, keep this simple, charting straightforward data per expenditure:

  • Amount
  • Payee
  • Subject area (IP, employment)
  • Business unit
  • Project type - business-as-usual or extraordinary

2. Diagnose your overage

Start, perhaps, with the final bullet of project type: Is your budget overage due to a series of unforeseen circumstances, or did you just make bad projections? If it’s the former, consider a conversation with the C-suite to adjust your budget for the rest of the year.

3. Align spend with strategy

How much time and money have you invested into non-profitable areas of the business? Consider ways to wean them off Legal Department support with training or self-help tools.

4. Reimagine your resourcing

With about half of your budget going to outside legal providers, this is an area with considerable potential for savings. Consider adjusting your roster of outside providers, taking into account:

  • Size and profile: Not every matter warrants AmLaw 100 or Magic Circle involvement; save money by moving basic work to small and midsize firms
  • Bundling: Look for patterns when it comes to subject area and business unit. If several firms are working simultaneously but separately on similar sets of matters, you’re likely bleeding money on work being done in duplicate (or worse). Bonus: If you concentrate a bundle of work at a given firm, you’re more likely to negotiate a volume discount

team-collaboration - reviewing legal matters

5. Get strict about your guidelines

Make sure you are monitoring external spend and tracking costs versus estimates. If you do not already have outside counsel guidelines in place, draft some; if your guidelines are set, enforce them ruthlessly. This is easy to monitor with a legal spend management software, which allows you to set up and enforce billing guidelines.

6. Start over

If you’re over budget again and again, you’re likely working from a “last year’s spend plus 5 percent” document that is ancient and busted. Start fresh with a clean slate. Xakia has a white paper with step-by-step instructions for smarter legal budget construction – and an Excel template to make it relatively painless.

productivity hacks for in house legal departments

Get more valuable insights and practical tips to boost your productivity

Xakia’s Legal Department hacks cover many aspects of your Legal Department, from time management to staff onboarding to crisis management.

To bring more time, energy and sanity to your day, download our latest white paper, 36 Productivity Hacks for In-House Legal Teams.

Download now


If you would like to learn how Xakia's legal spend management software can help you avoid legal budget blowout, speak to one of our experienced consultants today for a demo, or sign up for a free trial.

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